The SEC Empire Strikes Back After Reinjuring Its Groin On Planet Daspin

October 18, 2019

A long time ago in a regulatory galaxy far away, the Securities and Exchange Commission Empire was engaged in a war of civil litigation. Okay, maybe not so, so long ago, but how about back in 2013? Although the relatively low-budget litigation that I am presenting to you may not actually involve a Hollywood blockbuster film with real Death Stars and Millenium Falcons, you do know that there aren't any "real" Death Stars and Millenium Falcons, right?

And, while we're at it, just what the hell was going on with that Darth Vader guy and his wheezing? I mean, you know, if they could zip around the universe and blow up planets, couldn't they just give that guy an antihistamine? 

After Luke Skywalker found out that his father, Anakin Skywalker, was none other than Darth Vader, did the kid ever send him a Father's Day card? Does Hallmark  have one for a father who just cut off his kid's arm with a light-saber, and would that card still cost more Canadian dollars than American?  Then again, after Hans Solo's kid Kylo Ren killed him, did Luke send a condolence card? Sadly, old Luke isn't doing all that well these days -- he's sort of with the Force but in a misty, see-through sort of way. 

Okay, that's enough digression, sit back, get a bucket of popcorn, and enjoy today's Blog., which features the blockbuster holiday hit:

The Empire Strikes Back But Pulls Its Groin, Gets Sidelined, Takes Prohibited PEDs, Gets Suspended, Gets Back Into The Ring, Reinjures Its Groin (Yes, The Same Groin Because The Empire Only Has One Groin), Sits Out A Few Bouts, Gets Back Into The Ring, And Seems To Have Won Round One.

2013 SDNY Motion to Compel

On November 14, 2013, the SEC sought an order from the Southern District Of New York ("SDNY") compelling Edward M. Daspin to comply with an investigative subpoena demanding his testimony "into, among other possible violations of the securities laws, potential fraud in the offer and sale of securities of three related companies, Worldwide Mixed Martial Arts Sports, Inc., WMMA Distribution, Inc. and WMMA Holdings, Inc." Securities and Exchange Commission v. Edward M. Daspin, a/k/a "Edward Michael," a/k/a "Ed Michael," (SDNYCivil Action No. 13 Misc. 00389 /November 14, 2013;  SEC Lit.. Rel. No. 22871 / November 18, 2013).

2013 SDNY Compulsion Order

On November 27, 2013, SDNY ordered Daspin to comply with the SEC investigative subpoena;  moreover,  the court directed Daspin to appear for testimony despite his claimed heightened susceptibility to stress. Also, SDNY denied Daspin's cross-motion for a protective order to limit the SEC to examining Daspin through written questions, or, alternatively, to require the SEC to pay for the attendance of his personal physician during testimony. Securities and Exchange Commission v. Edward M. Daspin, a/k/a "Edward Michael," a/k/a "Ed Michael," (SDNYCivil Action No. 13 Misc. 00389 /November 27, 2013;  SEC Lit.. Rel. No. 22884/ December 4, 2013).

2014 2Cir Denial of Stay

On February 5, 2014, the United States Court of Appeals for the Second Circuit ("2Cir") denied Daspin's motion for a stay of SDNY's December 5, 2013 OrderSecurities and Exchange Commission v. Edward M. Daspin, a/k/a "Edward Michael," a/k/a "Ed Michael," (SDNYCivil Action No. 13 Misc. 00389 /November 27, 2013;  SEC Lit.. Rel. No. 22920/ February 6, 2014).

April 23, 2015 OIP

With its investigation completed and conclusions firmly in place, on April 23, 2015, the SEC filed an Order Instituting Administrative and Cease-And-Desisst Proceedings In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (OIP, '33 Act Rel. 9755; '34 Act Rel. 74799; Admin. Proc. File 3-16509 / April 23, 2015). As set forth, in part,  in the "Summary" to the OIP:

1. Daspin, Agostini, and Lux participated in the fraudulent unregistered offerings of the securities of Worldwide Mixed Martial Arts Sports, Inc. ("WMMA") and an affiliate, WMMA Distribution, Inc. ("WMMA Distribution"),1 start-up companies formed to establish an international league of mixed martial arts tournaments that would generate digital content and sell branded products.

2. From December 2010 through approximately June 2012 (the "relevant period"), WMMA and WMMA Distribution raised a total of $2.47 million from seven investors, of which at least $2 million was raised fraudulently. Daspin, who orchestrated the fraud, targeted unemployed professionals whom he lured in with offers of executive-level positions at the Companies. Typically it was only after prospects arrived for a "job interview" that they learned that they would be required to make a substantial investment as a condition of obtaining employment and receiving a salary.

. . .

10. Edward Michael Daspin, age 77, founded and for all practical purposes controlled the Companies. In 1978, Daspin was convicted of bankruptcy fraud for concealing from the bankruptcy trustee assets of a bankrupt company he had controlled; he was sentenced to eighteen months in prison. United States v. Edward Michael Daspin, 77 Crim. 00238 (D.N.J.) and United States v. Michael Daspin, 77 Crim. 0196 (S.D.N.Y.). Daspin resides in Boonton, New Jersey. Daspin has never been registered with the Commission as a broker-dealer or associated with a registered broker-dealer.

11. Luigi Agostini, 38, was a director and the executive chairman of the board of each of the Companies. Agostini resides in Jersey City, New Jersey.

12. Lawrence R. Lux, age 55, was a director and CEO of each of the Companies. Lux was briefly associated with a registered broker-dealer from December 2005 to April 2006, but otherwise has never been associated with a registered broker-dealer or registered with the Commission as a broker-dealer.

June 15, 2015 ALJ Order

On May 14, 2015, Respondent Daspin moved to dismiss or stay the SEC's proceeding against him, which Enforcement opposed. On June 15, 2015, ALJ Foelak characterized the status as follows in In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (Order, Admin. Proc. Rul. Rel. 2810; Admin. Proc. File 3-16509 / June 15, 2015):

[T]he filings show that Daspin currently has a severe medical condition. The Motion analyzes Daspin's condition in light of seven factors that federal courts that have considered this issue have examined when deciding whether to continue indefinitely an action due to a party's medical condition: (1) the medical evidence and judgments; (2) the related evidence of his activities outside the courthouse; (3) the availability of measures to minimize the risks to his health in subjecting him to a hearing; (4) the temporary or permanent character of the physical problem; (5) his ability to participate in his defense; (6) whether the proceeding is likely to worsen his condition; and (7) the magnitude and seriousness of the case, or the degree of harm to the public interest as a result of the delay.

Augusts 14, 2015 ALJ Scheduling Order

By August 14, 2015, Darth Foelak was replaced by Darth Grimes (also known as ALJ Grimes). In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (ALJ Scheduling Order, Admin. Proc. Ruling Rel. 3041; Admin. Proc. File 3-16509 / August 14, 2015). ALJ Grimes issued a Scheduling Order in which he noted, in part:

I therefore conclude that there is currently no authority to indefinitely continue this proceeding. This is especially so here, where Mr. Daspin's doctor estimates that it will be at least a year before he can determine whether Mr. Daspin will ever be able to participate in this proceeding. In other words, I lack the authority to indefinitely continue this matter.

Mr. Daspin's case, however, has been stayed for two months. It would be unfair to make him suddenly prepare for the hearing that is currently scheduled to take place on November 2, 2015. Taking account of the two months that Mr. Daspin's case has been stayed and the parties' desire not to hold separate hearings for Mr. Dapsin and Mr. Agostini, I ORDER that the hearing as to Mr. Daspin and Mr. Agostini will begin on January 4, 2016.

The orders regarding Mr. Daspin's medical status reports are MODIFIED. Mr. Daspin's counsel has stated that his next status report will report no change but that Mr. Daspin will consult with a specialist in late September. Mr. Daspin therefore need not file a status report on September 15, 2015, but shall report the results of his next consultation as soon as he is aware of those results, but no later than October 15, 2015. 3 If the Division chooses to retain a medical expert, Mr. Daspin shall submit to an examination by that expert, on reasonable notice by the Division.

October 6, 2015 ALJ Order

In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (ALJ Order, Admin. Proc. Ruling Rel. 3202; Admin. Proc. File 3-16509 / October 6, 2015), SEC Administrative Law Judge Grimes offers this insight into the status of the case:

A hearing in this matter is currently scheduled to begin on Monday, January 4, 2016. See Edward M. Daspin, Admin. Proc. Rulings Release No. 3183, 2015 SEC LEXIS 4001, at *1 (Sept. 30, 2015). Counsel for Respondent Edward M. Daspin withdrew effective September 28, 2015. Id. at *3 & n.2.

On October 2, 2015, Daspin sent an e-mail to this Office forwarding a request that the
Division of Enforcement sent him asking for certain medical records. Daspin asserts that the Division is harassing him through its e-mail to him. Daspin has evidently not filed the substance of his e-mails with the Office of the Secretary in compliance with Rules of Practice 151 through 153. See 17 C.F.R. §§ 201.151-.153. The same day, the Division e-mailed this Office a courtesy copy of a letter addressed to me. Among other things, the Division asks that I direct Daspin to comply with existing orders concerning disclosure of his medical records. See Edward M. Daspin, Admin. Proc. Rulings Release No. 3041, 2015 SEC LEXIS 3348 (Aug. 14, 2015); Admin. Proc. Rulings Release No. 2939, 2015 SEC LEXIS 2933 (July 17, 2015). Later on October 2, Daspin responded to the Division's letter with yet another e-mail to this Office, and again without evidently filing anything with the Office of the Secretary. Daspin has since sent this Office multiple further e-mails, either sent in a like manner or by copying this Office on his
e-mails with the Division.

A separate October 4, 2015, e-mail, sent purportedly on behalf of Daspin to this Office by "L.C. May," attached motions requesting dismissal of this proceeding or, alternatively, reconsideration of the August 14 scheduling order, a continuance, and my withdrawal from the proceeding.

As a convenience to all participants, parties to administrative proceedings are provided
with and permitted to use this Office's e-mail address. Use of this Office's e-mail address allows parties to serve each other and this Office with courtesy electronic copies of papers they file with the Office of the Secretary. This Office's e-mail address is not intended, however, to serve as a forum for the airing of grievances. Instead, parties should attempt to resolve disputes amongst themselves before raising disputes with me. And in raising a dispute with me, the parties must follow the Commission's rules that require papers to be filed with the Office of the Secretary. See 17 C.F.R. §§ 201.151-.153. Doing so ensures that everything that takes place during the course of a proceeding is preserved for the public record.

I therefore ORDER Daspin to CEASE sending this Office e-mails unless he is doing so in
response to a direct inquiry or request from this Office or is merely providing courtesy copies of documents properly filed with the Office of the Secretary, consistent with the Rules of Practice. He may also send this Office e-mails if he is genuinely seeking to clarify orders I have issued. Future attempts by e-mail to argue about or contest orders will not be considered.

Given Daspin's pro se status, I will consider his October 2 e-mails, together with the
Division's responsive letter. Daspin may file a combined reply to the Division's letter and response to its request for medical records within five business days after service of the Division's letter. See 17 C.F.R. § 201.154(b). Alternatively, he may simply supply the records the Division asserts he has omitted. . .

SIDE BAR: Progress, a lot making not, is the SEC! Yeah, I know, that comes off as a bit of Yoda-speak but, hey, may the Force be with you. In any event, added to the issue of Daspin's medical condition, we now see that he is proceeding pro se -- ever a complicating factor for adversaries and adjudicators -- and, on top of that, Daspin has a penchant for communicating with the ALJ via email. The ALJ has made it clear: Do or do not, there is no try! Emails sending stop!.

October 16, 2015 Lux Settles

Respondent Lux settled on October 16, 2015, and pursuant to an Order Making Findings and Imposing Remedial Sanctions and a Cease-And-Desist, Lux was ordered to Cease-And-Desist from further securities laws violations and was Barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization; and barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock. In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (Lux Order Making Findings/Imposing Sanctions, '33 Act Rel. 9963; '34 Act Rel. 76178; Admin. Proc. File 3-16509 / October 16, 2015)As noted in the Lux Order:

Respondent shall pay disgorgement of $36,853.21 which represents profits gained as a result of the conduct described herein, and prejudgment interest of $4,061.05, but that payment of such amount is waived based upon Respondent's sworn representations in his Statement of Financial Condition dated August 17, 2015 and other documents submitted to the Commission. Also based upon Respondent's sworn representations in his Statement of Financial Condition dated August 17, 2015 and other documents submitted to the Commission, the Commission is not imposing a penalty against Respondent.

December 4, 2015 ALJ Order

On December 4, 2015, ALJ Grimes issued 
In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (ALJ Order, Admin. Proc. Ruling Rel. 3372; Admin. Proc. File 3-16509 / December 4, 2015),  in which he noted, in part, that:

Separately, Mr. Daspin forwarded by e-mail on December 1 what appears to be a motion concerning several issues. It is not clear whether he properly filed and served this motion. Although Mr. Daspin has been warned not to forward substantive requests by e-mail alone without properly serving and filing his requests, see Edward M. Daspin, Admin. Proc. Rulings Release No. 3202, 2015 SEC LEXIS 4103 (Oct. 6, 2015), because Mr. Daspin discusses a number of issues that are likely to arise during the hearing, I address the issues herein.
. . .

Mr. Daspin also asks that I allow him "to use any of the 150,000 documents given at the request of the SEC[']s subpoena request." It is unclear what relief Mr. Daspin seeks. As with any respondent, he is permitted to use any relevant and material documents that are not unduly repetitive. 17 C.F.R. § 201.320. If, however, Mr. Daspin is asking for permission to submit exhibits without numbering or marking them, his request is denied. Numbering or marking exhibits in a coherent fashion is required. It is the only way for litigants, judges, and appellate authorities to identify exhibits. Without a coherent numbering system and exhibit list, a litigant will find it impossible to locate a document when he or she needs it. That is why I ordered that copies of exchanged exhibits be pre-marked. See Edward M. Daspin, 2015 SEC LEXIS 3348, at *11. To the extent electronic versions of these exhibits are exchanged, they necessarily need to be pre-marked so they can be electronically displayed in a coherent fashion.

December 14, 2015, ALJ Order

In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (ALJ Order, Admin. Proc. Ruling Rel. 3393; Admin. Proc. File 3-16509 / December 14, 2015), we come across this Order issued by SEC Administrative Law Judge Grimes:

Respondent Edward M. Daspin has repeatedly been warned, both by me and by members of this office's staff, not to e-mail this office or its staff with arguments not properly filed with the Commission. See Edward M. Daspin, Admin. Proc. Rulings Release No. 3202, 2015 SEC LEXIS 4103 (Oct. 6, 2015). He has repeatedly and consistently failed to heed those warnings. Recently, he sent this office a number of argumentative e-mails and copied this office on several e-mails directing abusive comments to counsel for the Division of Enforcement. For example, on December 10, 2015, he forwarded a document by e-mail to this office, members of this office's staff, counsel for the Division, and Respondent Luigi Agostini. In the body of the e-mail, Daspin stated:

DEAR Gentleman ,
Enclosed is My cover page and service list to Mr Fields.
How in the world di you men get involved in this disingenuous case!
Im surprised that each of you had the balls to file a complaint which the evidence
shows was completely fraudulent in the first place.
You went after the good guys.!!
Merry Xmas
EM Daspin Pro Se

Over the past weekend, Mr. Daspin sent multiple e-mails containing substantive commentary about his case. Relevant examples are attached to this Order.

In light of Daspin's consistent and repeated failure to heed multiple warnings and the increasingly discourteous and unprofessional nature of his e-mails, I order the following. Except to forward courtesy copies of his filings properly made with the Office of the Secretary, Daspin is prohibited from using this office's e-mail address or the e-mail address of any member of this office's staff. Going forward, e-mails from Daspin containing any language going beyond simply indicating that a courtesy copy is attached will be deleted upon receipt and will not be considered, as will any of his e-mails that do not attach a courtesy copy.

SIDE BAR: To see copies of the emails cited in the December 14th ALJ Order, read this Supplement

After failing to destroy the Daspin Death Star, the SEC rebels are in retreat and have fallen back to planet Dagobah for training by Jedi Master Yoda. Darth Daspin continues to attempt to turn the ALJ and his office to the Dark Side and has lured a number of regulators into a trap in the cloud City of Daspin. Darth Daspin overwhelms Skywalker Grimes and mocks his prisoner with the boast that he is his father, not in genetic terms but in the sense of former Boston Red Sox pitcher Pedro Martinez's lament after another defeat at the hands of the New York Yankees. In a future episode, Martinez joined the ranks of the rebels and defeated the Empire, you have to buy the action figures for that movie separately. 

August 17, 2015 ALJ Order

In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (ALJ Order, Admin. Proc. Ruling Rel. 3409 Admin. Proc. File 3-16509 / December 17, 2015), we confronted with yet another Order issued by SEC ALJ Grimes, which states, in part:

Considering Daspin's filings as a combined whole, there are several problems with his motion. First, motions for summary disposition were due October 19, 2015. Edward M. Daspin, Admin. Proc. Rulings Release No. 3041, 2015 SEC LEXIS 3348, at *10-11 (Aug. 14, 2015). Without seeking leave, Daspin filed his motion over six weeks late and only one month before the hearing. This fact alone is sufficient to deny the motion.

Even putting aside the untimeliness of the motion, in ruling on summary disposition, I must take as true the allegations in the OIP. 17 C.F.R. § 201.250(a). At most, Daspin has shown that material facts alleged in the OIP are in dispute. But if material facts are in dispute, a motion for summary disposition must be denied. See 17 C.F.R. § 201.250(b)

To the extent Daspin asks me to dismiss this proceeding based on his allegation of prosecutorial misconduct, his motion is denied. At most, Daspin has alleged that the evidence does not support the Division's case. But that allegation, without more, cannot be determined based on arguments concerning Daspin's view of the evidence. Standing alone, Daspin's speculative belief is not sufficient to warrant summary disposition. Daspin's motion to stay and his motion for summary disposition are DENIED.

You're simply going to have to trust me when I tell you that the above list of motions, orders, rulings, queries, emails, and the like is not a complete rendering of the Daspin file. For a better sense of the breadth and depth of this matter, VISIT

Regardless, the SEC has awakened the Force. The fight continues. The struggle goes on.

2016 ALJ Grimes Initial Decision

ALJ Grimes actually managed to issue an Initial Decision.In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (Initial Decision of Default as to Edward M. Daspin, Init. Dec. Rel. No. 1051; Admin. Proc. File 3-16509 / August 23, 2016). (the (2016 ALJ Grimes Initial Decision")
As set forth in the 2016 ALJ Grimes Initial Decision's "Summary:"

Respondent Edward M. Daspin a/k/a "Edward (Ed) Michael" founded several mixed martial arts companies and sold stock in them to a number of investors. He did so unlawfully, in unregistered offerings as an unregistered broker. He compounded this activity by deceiving investors with numerous lies and omissions about core aspects of the companies, which later failed. He also deceived them with schemes to hide his control and enable his fraud. And for many months, he attempted to derail this proceeding and evade responsibility. Because of Daspin's failure to appear at two scheduled hearings, I found him in default and deemed true as to him the allegations of the order instituting proceedings (OIP). In this initial decision, I impose on Daspin industry and penny stock bars and a cease-and-desist order. I further order him to pay disgorgement of $1,948,258.47, plus prejudgment interest, and civil penalties of $915,000.

2018 Order on Ratification

In any event, about a year and a half after the issuance of the 2016 ALJ Grimes Initial Decision, lo and behold, we've now reached In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (PUBLIC REDACTED Order on Ratification, Admin. Proc. Ruling Rel. 5619; Admin. Proc. File 3-16509 / February 20, 2018). ttps://  
As ALJ Grimes muses in his February 20, 2018 Order:

I have considered the parties' properly filed submissions and reconsidered the record. The short of this case is that Daspin failed to appear at the merits hearing and then failed to appear at a hearing held solely to allow him to show why he missed the merits hearing. Daspin also prevented a witness -- his wife -- from testifying at the second hearing. A default order followed Daspin's failure to attend both hearings. I deemed true the facts alleged against Daspin and imposed sanctions.

In a series of post-remand filings, Daspin has raised a host of factual and legal arguments. A fair number of his factual assertions lack any evidentiary support. And his legal arguments proceed as if he legitimately missed two hearings and is the innocent victim of a vast conspiracy. None of Daspin's arguments have merit. For the reasons discussed below, I revise portions of two orders and otherwise ratify all actions I have taken in this proceeding and nearly all actions taken by my predecessor.

Page 2 of the February 20, 2018 Order

By e-mail sent on October 1, 2015, Daspin submitted a declaration signed by Dr. Puzino (Second Puzino Decl.), in support of motions to continue or dismiss, which, given its content and style, was also written by Daspin. The declaration asserted that I:

put[ ] Mr. Daspin in the incomprehensible position that regardless of his medical circumstances he must either default or die trying to save his reputation. The man cannot defend himself and the dissolution of the protections puts our legal system at risk, as unless something is done to restore the postponement Mr. Daspin will be facing a death penalty, for a crime that he advises he did not commit.27

In support of its opposition to Daspin's motions, the Division submitted a letter from Dr. Stanley J. Schneller, M.D., a professor of cardiology at Columbia University since 1985. 28 Dr. Schneller refuted Dr. Puzino's assertions about Daspin's health and asserted that Daspin's then-recent REDACTED test showed "no evidence that Mr. Daspin is at risk of a REDACTED  or other adverse outcome from stress." 29 Dr. Schneller further stated that there was no evidence Daspin REDACTED during his deposition and characterized Dr. Puzino's opinions as "without medical foundation," "medically unfounded," and "inconsistent with Dr. Puzino's failure to take medial steps to diagnose and treat Mr. Daspin's condition." 30 Indeed, he was struck by the contrast between Dr. Puzino's dire warning about Daspin's health and "the leisurely pace with which he has addressed" Daspin's alleged problem, given that patients win Daspin's supposed circumstance would normally be seen within days. 31 He also stated that Dr. Puzino misleadingly omitted certain test results, "misrepresented the key finding" of Daspin's REDACTED  test, and misinterpreted another test. 32 In conclusion, Dr. Schneller opined that there is no reason Daspin could not participate in this proceeding. 33

Pages 5 - 6 of the February 20, 2018 Order

Consistent with the order I issued on January 8, the Division attempted to schedule Daspin's interview with its expert. Because Daspin did not cooperate, the Division scheduled the interview and notified Daspin of the time and place.69 Instead of appearing for the interview, Daspin sent an e-mail saying that he was ill and confined to his home.70

During the evening of February 10, 2016, Daspin sent an e-mail informing my office and the Division that he had taken affirmative steps to prevent his wife from testifying at the next day's hearing.71 And in fact, neither Daspin nor his wife appeared.72

Because Daspin failed to appear, the Division's evidence about the reason for his absence from the January hearing was unrebutted. That evidence, including the report and testimony of Dr. Harold J. Bursztajn, M.D., who has practiced clinical and forensic neuropsychiatry since 1982, demonstrated that Daspin concocted his alleged REDACTED.73 In short, Dr. Bursztajn explained that Daspin staged his REDACTED to manipulate this proceeding to obtain a narcissistic benefit. 74 Dr. Bursztajn also opined that Daspin engages in a "pattern of grandiosity" that involves humiliating others and portraying himself as a hero.75

Pages 5 - 6 of the February 20, 2018 Order

This brings us to Daspin's alleged medical evidence and his claim that REDACTED caused his REDACTED and his absence from the January hearing. In his declaration in support of his motion for a restraining order, Daspin says that he presented "incontrovertible evidence . . . that it was the side effects" of the medicine Dr. Puzino gave him that caused his REDACTED.145 There are a number of problems with this assertion.

For starters, Daspin's history of concocting false medical excuses, together with his penchant for inventing facts, would give anyone pause. That is particularly the case with Dr. Puzino's declarations, the last five of which Daspin prepared. Daspin repeatedly used the declarations to present argument and criticism of my decisions. The invective and legal observations contained in Dr. Puzino's declarations raise doubts about their reliability or usefulness. 146

Moreover, Dr. Puzino's conclusion that REDACTED caused Daspin's REDACTED is contrary to objective evidence. Although Dr. Puzino says that he gave Daspin REDACTED samples in mid-December 2015, Daspin's contemporaneous medical records contain no mention of REDACTED before January 24, 2016. 147. As Dr. Bursztajn explained, either Dr. Puzino failed to document dispensing REDACTED and the advice he gave Daspin, thereby behaving "in an extraordinary haphazard manner . . . well below the standard of care," or there are serious reasons to think that Dr. Puzino's declarations are inaccurate. 148

Pages 23 -24 of the February 20, 2018 Order

August 23, 2018 Notice from the SEC's Chief ALJ

As a result of the United States Supreme Court's ruling in Lucia v. SEC, On November 30, 2017, the SEC ratified (or re-ratified) the appointments of all of its ALJs. Before all ratifications took place, however, the SEC essentially stayed any pending administrative proceeding before one of it's pre-ratified ALJs, which, as you probably figured out, included Daspin's proceeding. Thereafter, the SEC walks onto the field, blows the whistle, and says the prior play is ruled dead because one of the referees hadn't renewed his referee license and they started the game from the beginning with no score and no penalties. In re Pending Administrative Proceedings (Notice from the Chief Administrative Law Judge; Admin. Proc. Rul. Rel. No. 5954; Admin. Proc. File Nos. 3-15006, et al. / August 23, 2018).  

SIDE BAR: For Details on Lucia v. SEC, READ: "BREAKING NEWS: Lucia V. SEC / Supreme Court Finds SEC ALJs Unconstitutional ( Blog / June 21, 2018) If it would help you coneptualize what's going on with Lucia, think of it as the SEC having frozen Daspin in carbonite and thinking he's now their prisoner -- only to learn that the Supreme Court ordered him released from the horrific bondage. 

September 12, 2018 Assignment of Daspin to Chief ALJ Murray

Accordingly, on September 12, 2018, ALJ Grimes was relieved of the ordeal of the Daspin case, which was then dumped into the lap of Chief ALJ Brenda P. Murray.In re Pending Administrative Proceedings (Chief Administrative Law Judge's Order Assigning Proceedings Post Lucia v. SEC; Admin. Proc. Rul. Rel. No. 5955; Admin. Proc. File Nos. 3-15006, et al. / September 12, 2018)

April 10, 2019 Final Prehearing Order

A public hearing was finally been scheduled for April 15, 2019, at 9:00 a.m. EDT in Courtroom 238, Jacob K. Javits Federal Building, 26 Federal Plaza, NY, NY 10278. In the Matter of Edward M. Daspin, a/k/a "Edward (Ed) Michael", Luigi Agostini, and Lawrence R. Lux (Final Prehearing Order, Admin. Proc. Rul. Rel. No. 6538, Admin. Proc. File No. 3-16509 / April 10, 2019) In any event, Respondent Daspin submitted yet another in a long, long, long line of submissions -- and in the "Final Prehearing Order," his latest effort is referenced in part as:

a twelve-page filing on April 8, 2019, titled "Final contempt response" that mainly asserts facts but, in addition, asks for directions to the courthouse, requests that the hearing begin at 10:30 a.m. because of traffic, and states that Daspin will rely on the Division for witnesses and copies of exhibits.

SEC Chief ALJ Brenda P. Murray barely contained her likely exasperation with this case (and the collective exasperation of all those who preceded her), when she ruled, in part, that:

With respect to Daspin's first request, there are many online sites that will provide door-to-door directions for getting to the Javits Federal Building using a range of transportation options, including cars and public transportation.

July 23, 2019 Order Denying Motion for Judge's Notes

As explained in part in In the Matter of Edward M. Daspin  a/k/a "Edward (Ed) Michael", Luigi Agostini, and Lawrence R. Lux (SEC Order Denying Motion for Judge's Notes; Admin. Proc. Rul. Rel. No. 6637; Admin. Proc. File No. 3-16509 / July 23, 2019), Chief ALJ Murray noted that Respondent Daspin had emailed her and:

he asked me to provide him with a redacted copy of my notes from the hearing as a substitute for a copy of the hearing transcript. Construing the email as a motion, Daspin's request is DENIED. I cannot provide one party my informal perspective on events.

In prior rulings I have indicated what is necessary to receive a free hearing transcript. . .

October 16, 2019 ALJ Initial Decision

If you think that I'm going to regale you with all the crap and nonsense that transpired after Chief ALJ Murray was assigned, you're nuts. Suffice it to say that after the September 12, 2018, Order, there are nearly 50 orders, notices, motions, letters, emails, and the like listed on the SEC's Administrative Proceeding File for the Daspin case.

So . . . fast forward, as it were. We go past ten days of SEC hearings in April and May 2019, where ten witnesses and Daspin testified and some 290 exhibits were entered into evidence. We move, at warp speed, past the post-hearing memos. We fly by various emails and documents that Daspin insisted be made part of the post-hearing record. In the Matter of Edward M. Daspin a/k/a "Edward (Ed) Michael;" Luigi Agostini; and Lawrence R. Lux, Respondents (Initial Decision, Init. Dec. Rel. No. 1387; Admin. Proc. File 3-16509 / October 16, 2019) (the "2019 Chief ALJ Murray Initial Decision")

As we are reminded in the 2019 Chief ALJ Murray Initial Decision:

Daspin is charged with willfully violating (1) Securities Act Section 17(a), Exchange Act Sections 10(b) and 20(b), and Rule 10b-5, 15 U.S.C. §§ 77q(a), 78j(b), 78t(b); 17 C.F.R. § 240.10b-5, as a result of his fraudulent conduct related to the securities offerings of Worldwide Mixed Martial Arts Sports, Inc. (WMMA), and WMMA Distribution, Inc.; (2) Securities Act Section 5(a) and (c), 15 U.S.C. § 77e(a), (c), by selling or offering to sell nonexempt unregistered securities; and (3) Exchange Act Section 15(a), 15 U.S.C. § 78o(a), by acting as an unregistered broker. OIP at 2-3, 14; Div. Br. 78-103. 

To Daspin's credit, he's hung in there and battled on. To the SEC's credit, they've turned the other cheek, bit their tongues, and pretty much endured as punching bags. Typical of bearing the blows with a subtle sense of humor and a tinge or resignation, we have this wry tribute from Chief ALJ Murray:

"Very" applies to all aspects of Edward Michael Daspin. He is smart, engaging, aggressive, persuasive, excitable, at times charming, and prone to swearing and yelling. E.g., Div. Ex. 577; Tr. 1823-25, 2673-74, 3399; cf. Tr. 774-75 (allegation by the Division that after a witness testified at the hearing, Daspin called the witness an "[expletive] liar, and one of these days I'm going to get you," which Daspin denied saying). Daspin considers himself a strategic planner, a visionary, a deal maker with a career of putting pieces together to organize companies; by his own account he has bought 350 companies and been sued many times but never lost. Tr. 2673-74, 2814, 2875, 3016, 3124-25, 3129. In 1978, Daspin was jailed for six months for a felony bankruptcy fraud conviction. Ans. at 8; Tr. 1878, 2814; see generally United States v. Daspin, No. 77-cr-238 (D.N.J.); United States v. Daspin, 77- cr-196 (S.D.N.Y.) He says that mistake has caused him forty years of pain and believes that federal prisoners who have served their sentences should be pardoned. Tr. 2814-15, 3019. 

at Page 3 of the 2019 Chief ALJ Murray Initial Decision

In considering some of the underlying issues before her, the Chief AlJ offered, in part, this:

In 2010, Daspin came up with the idea of creating an international league of mixed martial arts (MMA) tournaments where winners of local and area fights would compete against one another and move up in brackets leading to national and international championship matches. Tr. 68-70. MMA "is a full-contact combat sport that allows a wide variety of fighting techniques (such as Greco-Roman Wrestling, Kickboxing, Boxing, Karate, Jujitsu, etc.) to be used in a bout." Div. Ex. 1 at 7. At the time, there was one large mixed martial arts organization in the United States, but Daspin's innovative idea-which he initially developed with Luigi Agostini, a close friend of Daspin's son, and people he had worked with in other businesses- was for an international operation. Tr. 3021, 3050-51, 3070-71, 3096-98, 3260-64. He envisioned letting local promoters keep the live gate proceeds, and the WMMA companies would build a worldwide tournament and sell the programing. Tr. 2884-85. Daspin envisioned the creation of national leagues in the United States and fifteen other countries, each managed by sixteen subsidiaries and broken into regions. Div. Ex. 3 at 7; Div. Ex. 450; Tr. 720, 999-1003, 2884-85. The plan was to generate substantial revenues from payper-view sales, closed-circuit-television permits, delayed-broadcast television sales, and the like. Div. Ex. 3 at 7. Four country companies were to be operating by 2012. Div. Ex. 1 at 9. The companies would split the revenue from ticket sales with local and regional MMA promoters, who control the individual fighters, because their cooperation was crucial. Tr. 71-73. 

Daspin designed and put in place a convoluted (to put it mildly) legal structure involving a number of entities that he controlled. He initially funded the operation with a loan from his wife. Div. Ex. 147; Tr. 3298, 3302- 06. The central structure consisted of three companies. WMMA, incorporated in April 2010, was the principal operating company that would create the international MMA league that Daspin envisioned. OIP at 4; Ans. at 8. WMMA Distribution, a Nevada corporation formerly known as American Graphics Communications and Distribution Services, was created to distribute WMMA-branded content. 3 Ans. at 8. From an operations perspective, there was no functional difference between the two companies; the same people worked on the same projects. Tr. 2238-39. 

at Page 3- 4 of the 2019 Chief ALJ Murray Initial Decision

Chief ALJ Murray penned an exhaustive 57-page Initial Decision. Given my own fatigue and exhaustion with the case, I'm not up to the task of doing her prodigious effort justice -- so, if you want to get into the nitty gritty, click on the link above to the document and read the prose from beginning to end. Briefly, ALJ Murray found that:

The overwhelming evidence is that Daspin controlled all the events and knowingly performed or directed all the activities at issue. Tr. 126, 165-66, 193-94, 833, 841, 848, 1096, 1807, 2203, 2297, 2351-52. Daspin was therefore knowingly responsible for the deceptive and manipulative conduct described in the factual findings and reiterated below. 

Daspin's defense that the WMMA companies' boards approved most of the activities is invalid because he controlled the board. Daspin made Agostini board chairman; there is nothing in the record that shows Agostini was qualified to lead a startup, and all of the evidence from persons who were on the scene is that he simply transmitted direction and orders from Daspin. See Tr. 126, 822, 833-34, 841. Daspin gave Agostini and Mrs. Daspin exclusive authorization to sign checks and control the companies' financial records. Tr. 127, 136-38, 185, 321, 848, 1657, 1669, 1675-76, 1722; Div. Exs. 200, 201, 207, 207A. The other two board members, Lux and Main, signed whatever Daspin wanted them to sign without discussion. See, e.g., Tr. 235, 823-24, 827-50, 888-90, 916-20, 969. Lux signed things he did not understand or agree with because he needed the salary. Tr. 100, 701. Main was a chiropractor by profession with no experience in running a media business. 

at Page 38 of the 2019 Chief ALJ Murray Initial Decision

Further, the Chief ALJ found that:

The overwhelming evidence is that Daspin engaged in a scheme to find people with means and convincing them to buy securities by concealing critical information about the nature of the companies whose securities he was offering and selling. Tr. 290-92, 315, 638, 1265, 1269, 1271, 1562. Given the method of solicitation-placing advertisements on job websites catering to persons qualified to be high-paid executives-potential investors thought that they were interviewing with Daspin for a high-paying position. E.g., Tr. 58, 1583-84, 2218-20, 2707. Persons responding to the solicitation did not know that this was a bait-and-switch scheme. It was only at the in-person interview when most of them learned from Daspin that it was necessary to make an investment of $250,000 or more to be hired. E.g., Tr. 2229-35, 2245- 46. But see Tr. 2366, 2372 (Burnham mentioned to Heisterkamp "that there may be an opportunity to have equity in the company" during a phone conversation). The results of Daspin's conduct demonstrates that convincing individuals to invest as much as possible-as opposed to hiring management personnel suitable to the companies' needs-was his primary goal. As he told Lux, "[w]e're selling jobs here." Tr. 284-85. Among tactics he employed, Daspin encouraged potential investors to make large investments, using retirement accounts if necessary, to obtain more senior titles rather than evaluating their experience and credentials to make placement decisions. E.g., Tr. 731, 769, 1594, 1597-98, 2373. In addition, he hired Sullivan, Puccio, and Bederjikian even though their positions were redundant. Tr. 337-40, 1039-40. And when Diamond refused to invest, Daspin became aggressive and angry. Tr. 2677-81, 2683-88, 3228-32; Div. Ex. 631. 

at Page 39 of the 2019 Chief ALJ Murray Initial Decision

In considering the imposition of sanctions, ALJ Murray noted, in part, that:

Daspin's actions committed with scienter were repeated and frequent in that he directed a fraudulent activity that involved hundreds of interviews and the circulation of numerous PPMs containing material misrepresentations and omissions over two years. Tr. 1264-66, 1268-69, 1287-90, 1317, 3394-95. 

Daspin does not admit wrongdoing or make any assurance that he will not violate the securities laws in the future. At the hearing and in posthearing filings, he has been defiant: "You're never going to collect a dime from me. No matter what, you won't get a penny because I did nothing wrong." Tr. 3414. Instead he asserts that the Division is "here to kill people." Id. And he blames a "conspiracy" between the Division and most of the other witnesses. Daspin Br. 1, 8. 

The risk of future violations is high. Daspin has almost dangerous powers of persuasion. See, e.g., Tr. 2665. And there is a strong likelihood that he would continue to operate in the securities field if given the opportunity. He has stated "if I have enough energy and if I get paid a portion of what I lost, I would restart that company because I have the original promoters, and now I saw what the mistakes were." Tr. 3102-03. 

at Page 50 of the 2019 Chief ALJ Murray Initial Decision

Ultimately, Chief ALJ Murray denied the Division of Enforcement's deferred motion for evidentiary sanctions, and declined to exclude the testimony of Edward M. Daspin. Further, the ALJ ordered that Daspin:
  • shall cease and desist from committing or causing violations, and any future violations, of Sections 5(a) and (c) and 17(a) of the Securities Act of 1933, and Sections 10(b), 15(a), and 20(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5;
  • is barred from association with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in an offering of penny stock, which includes: acting as a promoter, finder, consultant, agent, or other person who engages in activities with a broker, dealer, or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock;
  • shall disgorge $322,681.50, plus prejudgment interest; and  
  • shall pay a $1,350,000 civil monetary penalty.
NOTE: ALJ Murray ordered that any funds recovered by way of disgorgement, prejudgment interest, or penalties shall be placed in a fair fund for the benefit of investors harmed by the violations.

Asheville Man Is Indicted For $13.5 Million Ponzi Scheme / The Defendant Allegedly Defrauded More Than 23 Victims, Including Some at, or Near, Retirement Age (DOJ Release)

SEC Issues Statement on Market Structure Innovation for Thinly Traded Securities (SEC Release)

The SEC Empire Strikes Back After Reinjuring Its Groin On Planet Daspin ( Blog)

Commissioner Acts to Stop Two Cryptocurrency Offerings As Second Regulatory Sweep Concludes (TSSB Release)

Digital Advertising Business Owner And Operator Arrested For Defrauding Investors Of Over $5 Million (DOJ Release)

Former Chief Operating Officer of Davis Bio-Pesticide Company Pleads Guilty to Conspiracy to Commit Mail, Wire, and Securities Fraud (DOJ Release)

SEC Obtains Final Judgment Against Former Executive Charged with Lying to Auditors (SEC Release)

Jury Convicts Businessman of $1.4 Million Fraud Conspiracy (DOJ Release)

Organizer Of Complex Nigerian Fraud And Money Laundering Ring Sentenced (DOJ Release)