[00:00:00] Speaker 04:
Go ahead.

[00:00:12] Speaker 01:
Thank you.

[00:00:13] Speaker 01:
Good morning, Your Honors.

[00:00:14] Speaker 01:
Jeffrey Isaacs on behalf of the defendant appellant, Kane Wen.

[00:00:18] Speaker 01:
I'm here with Lydia Hochmeister.

[00:00:20] Speaker 01:
Mr. Wen is appealing from three orders of the district court.

[00:00:27] Speaker 01:
As we've identified in our briefs, there were multiple problems with each of these orders.

[00:00:33] Speaker 01:
I'd like to start with the order denying Mr. Wen's application to reopen discovery.

[00:00:40] Speaker 01:
That, of course, is reviewed under an abuse of discretion standard.

[00:00:45] Speaker 01:
But here at the outset, I would like to note that the district court applied the wrong legal analysis

[00:00:53] Speaker 01:
uh... you start of course with rule sixteen before which allows for scheduling orders to be modified for good cause but that's just the first step the second step is sent to uh... the analysis requires why are you seeking to modify the

[00:01:11] Speaker 01:
uh... scheduling order here the district court inexplicably uh... assume that mrs uh... reading from the district court's order assume that a party satisfies who satisfies rule sixteen's good cause standard that party must still satisfy rule fifteen

[00:01:29] Speaker 01:
But Rule 15 has nothing to do with anything in this case.

[00:01:32] Speaker 01:
That has to do with amending pleadings.

[00:01:37] Speaker 03:
Can you tell me what due diligence was shown by Mr. Wen to really get those two depositions that he's seeking, the purpose for the opening of discovery, what due diligence he showed during the period of time between May

[00:01:58] Speaker 03:
22 and December 22.

[00:02:00] Speaker 01:
Well, he was in custody the entire time that Discovery was open.

[00:02:06] Speaker 03:
He was in custody until August, and then he was not in custody after that.

[00:02:11] Speaker 03:
He was in the FC, I believe.

[00:02:15] Speaker 01:
RRC.

[00:02:15] Speaker 03:
RRC.

[00:02:16] Speaker 01:
But that is still custody.

[00:02:18] Speaker 01:
You have to report there.

[00:02:19] Speaker 01:
He had very, and at that point he was pro-per.

[00:02:22] Speaker 03:
You understand that when someone

[00:02:24] Speaker 03:
is in an RRC, they have, among other things, they have all sorts of liberties, including meeting with lawyers, appointments, medical, and there's a whole series of things that they could have, that he could have done.

[00:02:38] Speaker 03:
He did nothing.

[00:02:39] Speaker 01:
well also wasn't he represented by council a certain portion of the time pardon for eight months wasn't he represented by he was represented by council for the first eight months he was in custody and i want to come back and answer your question your honor he was in uh for the first eight months he was in custody but this was all during covet 19 and he was at fci sheridan and virtually had no access i did not represent mr wen

[00:03:04] Speaker 01:
in the civil case, but I did represent him in a related criminal case.

[00:03:08] Speaker 01:
And I know both myself and his civil counsel, it was impossible to really contact him.

[00:03:14] Speaker 01:
I believe his civil counsel, as Mr. Wen said, only was able to have one telephone conversation.

[00:03:20] Speaker 01:
They did not allow for any in-person visits.

[00:03:22] Speaker 01:
But to address your question, Your Honor, what's really important here, the key data... But to address their question, though, did he not have phone contact then?

[00:03:31] Speaker 01:
Very limited.

[00:03:32] Speaker 01:
I think you actually had to get permission, and he only was able to get permission for one telephone conference.

[00:03:42] Speaker 01:
And that's in the record?

[00:03:44] Speaker 01:
Yes, Your Honor.

[00:03:45] Speaker 02:
Why wouldn't his counsel have

[00:03:47] Speaker 02:
had an obligation to show diligence in taking these two depositions?

[00:03:52] Speaker 01:
Well, here's the thing.

[00:03:53] Speaker 01:
The motion for summary judgment wasn't filed until January 30th of 2023, after the discovery period ended.

[00:04:03] Speaker 01:
And that is when Mr. Nguyen first finds out that the CFPB is relying upon the declarations of Mr. Kim and Mr. Tuyen

[00:04:15] Speaker 01:
And that's really the key and that's why I say the problem with the analysis by the district court is it's not rule 15, it's really rule 56 that you apply whether he has an opportunity to then go out and get declarations or conduct discovery.

[00:04:36] Speaker 02:
But that's a product, isn't that a product of counsel conducting no discovery?

[00:04:41] Speaker 02:
So you serve basic interrogatories, you have initial disclosures presumably.

[00:04:45] Speaker 02:
The idea that it was somehow a surprise that they moved for summary judgment based on the declarations of his

[00:04:54] Speaker 02:
the other people who he did business with.

[00:04:56] Speaker 01:
Well, it was a surprise because the CFPB plaintiffs didn't take any discovery either of Mr. Kim or Mr. Nguyen.

[00:05:06] Speaker 01:
And so if I was representing Mr. Nguyen at the time, I would not be taking their depositions until I actually saw what they were going to say.

[00:05:15] Speaker 03:
Well, but all of the witnesses were identified at the onset of this case.

[00:05:19] Speaker 01:
but not with the who knew what they were going to say mister when was and that's what you get at the position and request well that's what what's also why you have rule fifty six which allows for if you're once you see the motion in this and this was not a small motion for summary judgment dealing with the proper uh... defendant this is fifteen hundred pages of motion papers

[00:05:46] Speaker 01:
I believe that there was in excess of 100 exhibits, there were 29 declarations.

[00:05:58] Speaker 01:
So you're not going to really know what it is you need to address in something like this.

[00:06:02] Speaker 01:
until you actually see it.

[00:06:05] Speaker 01:
And that's exactly why you have rule 56, which allows for the court to provide or open discovery to address something like that if you don't have a chance.

[00:06:18] Speaker 01:
Mr. Wen never had a chance to conduct any discovery in opposing this.

[00:06:23] Speaker 01:
And here's the thing, though.

[00:06:25] Speaker 01:
Why not?

[00:06:26] Speaker 01:
The district court ultimately

[00:06:29] Speaker 01:
modify the order and his scheduling order and extended it to extended the trial date to I believe September of 2023, the motion hearing date to April of 2023,

[00:06:44] Speaker 01:
Why not just allow Mr. Wen to conduct discovery?

[00:06:47] Speaker 01:
He wanted to take two depositions and serve some written discovery to understand what type of money had already been collected so he could argue to reduce the amount of the restitution.

[00:07:02] Speaker 03:
But the question is, was that an abuse of discretion?

[00:07:05] Speaker 01:
And I think under the circumstances, because first, the wrong analysis was applied, and second, again, looking at the chronology, and the fact that that motion was not filed until January 30th, so even if he had conducted a deposition of Mr. Nguyen and Mr. Kim, it wouldn't necessarily have addressed the issues that they were raising in their declarations, which he was only received notice of on January 30th, if he even got the papers at that time.

[00:07:34] Speaker 04:
But he didn't even request reopening of discovery until one day before his opposition brief was due to the summary judgment motion.

[00:07:45] Speaker 04:
I mean, you'd think, you know, it would have been if he was acting diligently immediately when the summary judgment motion was filed, he'd ask to have discovery.

[00:07:58] Speaker 01:
Well, first again, it's 1,500 pages, so I don't know how long it takes to go through it and determine what you need.

[00:08:05] Speaker 01:
He's pro-per, but also he was involved in discussions with the CFPB during that time, as soon as he got out.

[00:08:14] Speaker 01:
And there was a settlement conference.

[00:08:16] Speaker 01:
And so it wasn't like nothing was happening and that he was doing nothing.

[00:08:19] Speaker 01:
It's just that he did not have an opportunity to conduct the depositions.

[00:08:24] Speaker 01:
But again, since it was continued,

[00:08:27] Speaker 01:
why not give him that opportunity to actually defend himself against this motion that was seeking a quarter billion dollars.

[00:08:36] Speaker 03:
I don't think that's the right question.

[00:08:39] Speaker 03:
I think the question is why would the judge have to do that given the fact that he had an attorney who had ten years of experience and obviously understood the rules of discovery and

[00:08:56] Speaker 03:
and did nothing during that period of time, even after he was pro se.

[00:09:01] Speaker 01:
Well, again, I think the record is pretty clear that he virtually had no access to his counsel.

[00:09:07] Speaker 01:
And that was common among federal inmates at this time due to COVID.

[00:09:12] Speaker 01:
You could not meet with, there was no in-person meetings and very limited telephone conferences.

[00:09:17] Speaker 04:
What period of time are we talking about here?

[00:09:20] Speaker 01:
I'm sorry?

[00:09:21] Speaker 04:
What period of time are we talking about that he was actually incarcerated?

[00:09:25] Speaker 01:
He was, there's a chronology that we set forth in our reply.

[00:09:33] Speaker 03:
Until August 8th I understand, is that correct?

[00:09:36] Speaker 01:
That's when he was transferred then to the RRC.

[00:09:39] Speaker 01:
Correct.

[00:09:40] Speaker 01:
But again, you're talking about a period of COVID and very limited access to anything.

[00:09:47] Speaker 01:
No cell phone, no laptop, no pad, and in a system where everything is electronic.

[00:09:57] Speaker 01:
And I think Mr. Nguyen showed in his declaration in support of his ex parte application that it was just

[00:10:05] Speaker 01:
very difficult, again, for somebody who is pro-per to be able to properly respond to this massive motion that was addressing 22 different causes of action.

[00:10:20] Speaker 02:
I want to turn to your attention in some of your remaining time to the restitution.

[00:10:26] Speaker 02:
You brought up the fact you don't

[00:10:29] Speaker 02:
contest that with respect to the restitution due that the contributions of the co-defendants offsets that amount?

[00:10:38] Speaker 01:
No, that is our position that it does offset it.

[00:10:41] Speaker 02:
Okay.

[00:10:43] Speaker 02:
And you think that that's contested by the CFPB?

[00:10:48] Speaker 01:
It's not in the judge's order, and it's not in the final judgment.

[00:10:53] Speaker 01:
The final judgment just says, pay $94 million, and that's what the CFPB tried to collect from me.

[00:11:00] Speaker 02:
So that may be something we'll seek clarification from your friends.

[00:11:05] Speaker 02:
With respect to the request for the hearing, why else would you be entitled to a hearing?

[00:11:14] Speaker 01:
Well, we think that there were genuine issues of material fact in dispute relating to what the correct amount was, but principally it has to do with, as your honor said, reducing that amount, which could be considerable

[00:11:30] Speaker 01:
As we documented in our brief, there was, in the record, there's about $124 million in judgments and settlements, and we approximated about 25 million had been already collected.

[00:11:46] Speaker 01:
That was two years ago.

[00:11:48] Speaker 01:
We know that there was additional monies collected since then.

[00:11:50] Speaker 01:
So we're talking about a substantial reduction in that, which could affect the,

[00:11:57] Speaker 01:
the civil penalties as well.

[00:12:00] Speaker 01:
And of course under civil penalties we're contesting that Mr. Wen was entitled to now under the Jarsky opinion was entitled to a jury trial on that issue.

[00:12:16] Speaker 01:
And if there's no more questions I'll reserve the remainder of my time.

[00:12:20] Speaker 04:
All right, thank you counsel.

[00:12:21] Speaker 01:
Thank you your honors.

[00:12:45] Speaker 00:
Good morning, your honors.

[00:12:46] Speaker 00:
May it please the court.

[00:12:47] Speaker 00:
Amanda Krauss on behalf of the Consumer Financial Protection Bureau and with their consent arguing on behalf of all plaintiffs at Belize.

[00:12:53] Speaker 00:
I'd like to start by setting the table a little bit.

[00:12:56] Speaker 00:
The summary judgment record in this case is clear that Mr. Wen is liable for his role in a deceptive student debt relief scheme.

[00:13:03] Speaker 03:
Actually, I'm sorry, but if you could actually turn to one issue that I'm trying to understand and I want to make sure I'm clear on your position.

[00:13:11] Speaker 03:
Sure.

[00:13:12] Speaker 03:
If 5565C3 requires the court to take into consideration the size of the defendant's financial resources,

[00:13:21] Speaker 03:
There's a pending motion, or excuse me, a pending pleading by Mr. Wen indicating that he's satisfied the information that was requested as to why he couldn't pay his financial resources.

[00:13:43] Speaker 03:
And that's sort of out in the ether out there.

[00:13:46] Speaker 03:
I don't think that the court has, the district court has ruled on that.

[00:13:49] Speaker 03:
But then but but if if the should we send it back so that the court can consider that before issuing the civil penalty?

[00:13:58] Speaker 00:
No, your honor the court this court can affirm the judgment on the penalty on the record before it the issue that's pending before the district court is a pending motion for contempt filed by the receiver in this case for mr. Wens failure to turn over assets in violation of the final judgment

[00:14:15] Speaker 00:
In the course of that proceedings, Mr. Wen has recently raised some new evidence in opposing the judgment.

[00:14:22] Speaker 00:
But I think the question of whether he has complied with the judgment is a separate question from whether the judgment is proper in the first instance.

[00:14:29] Speaker 00:
And the new evidence that's been brought up before the district court de facto was not before the trial court when the court entered the judgment.

[00:14:37] Speaker 00:
And so Mr. Wen, if Mr. Wen believes that that judgment or that new evidence should have changed the judgment, the proper avenue for that would be a Rule 60B motion.

[00:14:46] Speaker 00:
It wouldn't be belatedly raising it for this court on appeal to overturn.

[00:14:50] Speaker 00:
But so turning just to directly answer your question about the size of financial resources.

[00:14:55] Speaker 00:
To start, that was only one of many factors that the district court was required to consider in assessing the proper penalty.

[00:15:01] Speaker 00:
And the court, although it did express some skepticism about whether an ability to pay was the required

[00:15:07] Speaker 00:
that the court was required to consider his ability to pay and nevertheless took into account Mr. Wen's sizable cryptocurrency assets that were found through an earlier contempt proceeding that Mr. Wen had concealed in violation of an asset freeze.

[00:15:20] Speaker 03:
But do you agree that even considering those concealed cryptocurrencies that the size of that as compared to ultimately the fine, doesn't that play a role in this particular analysis?

[00:15:37] Speaker 03:
I mean, that was certainly a large amount fine.

[00:15:42] Speaker 03:
What was it?

[00:15:45] Speaker 00:
The penalty was $148 million, but the restitution at issue in this case is over $95 million.

[00:15:52] Speaker 00:
And again, Mr. Wen was held jointly and severally liable for that $95 million in restitution.

[00:15:57] Speaker 02:
And on that point, just for my exchange with your friend, the district court, you agree that the district court order says that any amount contributed as restitution by other defendants will reduce the defendant's liability.

[00:16:11] Speaker 02:
So it is joint and severally.

[00:16:12] Speaker 00:
Correct.

[00:16:13] Speaker 00:
The final judgment explicitly says that the order of restitution was joined several.

[00:16:16] Speaker 00:
We do not dispute that any amounts that have already been collected should offset Mr. Wen's liability.

[00:16:22] Speaker 00:
If there was a genuine dispute of material fact as to some of his liability, then of course that may need to be recalculated.

[00:16:28] Speaker 00:
I'm happy to discuss why there in fact was not a genuine dispute of material fact.

[00:16:31] Speaker 00:
So, no, there's no issue with respect to the offset.

[00:16:34] Speaker 04:
But back to the civil penalty, though, I am told by fact that even though there's supposedly cryptocurrency out there somewhere, it's not real in the sense that we don't know how much it is, where it is, you know, it's just out there.

[00:16:55] Speaker 04:
And what he has shown is that he doesn't have an ability to pay.

[00:16:59] Speaker 04:
almost $150 million in a civil penalty.

[00:17:04] Speaker 00:
So Mr. Wen is the one who created the uncertainty over the size of his financial resources.

[00:17:09] Speaker 00:
And again, I'll just remember that that's only one factor to be considered weighed against many other factors, including the fact that the gravity of the violations at issue in this case were very severe.

[00:17:21] Speaker 03:
Well, one of the other factors is his good faith, which the court is supposed to consider as well, which is what you're saying.

[00:17:30] Speaker 00:
Yes, and I think that Mr. Wen's course of conduct over the course of this case certainly establishes that he did not demonstrate the requisite good faith to get any mitigation of the penalty.

[00:17:41] Speaker 00:
That's demonstrated by the fact that he shifted company operations to try and conceal the company's operations from law enforcement.

[00:17:49] Speaker 00:
He deleted emails and text messages once the company's operations were coming to light.

[00:17:53] Speaker 00:
And then he hid assets in violation of a court ordered asset freeze.

[00:17:57] Speaker 00:
And so Mr. Wen's long course of conducts

[00:17:59] Speaker 00:
particularly with respect to the cryptocurrency, demonstrates both that the size of financial resources is probably not a factor that the court was required to mitigate here, and also that he demonstrated bad faith.

[00:18:12] Speaker 00:
So just to walk through a little bit about the evidence of the cryptocurrency.

[00:18:17] Speaker 00:
So to start on a financial disclosure form that Mr. Wen was required to complete through the preliminary injunction, he first stated that he had no cryptocurrency whatsoever.

[00:18:27] Speaker 00:
When the Consumer Financial Protection Bureau discovered that there were some inaccuracies in his withholding or in his statements, we pressed him on that.

[00:18:35] Speaker 00:
And only at that point did he disclose for the first time that he had some cryptocurrency, but not all of it.

[00:18:40] Speaker 00:
Then after a show cause hearing on the Bureau's first motion for an order to show cause, he then disclosed slightly more, but still not everything.

[00:18:51] Speaker 00:
He really, through the course of this case, has only

[00:18:54] Speaker 00:
provided information when pressed by it and when required through evidence that made it clear that he simply couldn't hide it any further.

[00:19:02] Speaker 00:
The district court in the first order to show cause hearing described Mr. Wen's conduct as a cat and mouse game, which I think is exactly right.

[00:19:09] Speaker 00:
So again, he's the one that created the uncertainty about the size of his financial resources, which I think shows that it's appropriate that the district court didn't mitigate the penalty on that basis.

[00:19:20] Speaker 02:
penalty as I understand it, you counted every single day of the period, three violations per day.

[00:19:30] Speaker 02:
What are we supposed to do with the fact that it seems like it is unlikely that, or I guess

[00:19:40] Speaker 02:
Give me a sense of your logic here, where the violations were charging enrollment fees, which as I understand would be one time per client or victim, charging recertification fees, and I think those were more periodic, and then deceptive conduct, which would involve communication to each

[00:20:06] Speaker 02:
member of the class, what's the Bureau's theory as to what it has to show to establish that all three of those violations, some of which are quite discrete in time and periodic and not continuous, actually I think all of them are, were happening at each point in the time period?

[00:20:24] Speaker 00:
Sure, Your Honor.

[00:20:24] Speaker 00:
So the statue under 12 U.S.C.

[00:20:28] Speaker 00:
5565C states that a penalty should be assessed for each day that a violation continues.

[00:20:33] Speaker 00:
And so here, this is a course of conduct that began on November 5th of 2015 and continued until, I believe, October 19th of 2019.

[00:20:41] Speaker 00:
And so those company practices began at the beginning and continued throughout that period.

[00:20:49] Speaker 00:
But if the district court was supposed to take into account each individual violation, so for instance, each illegal advance fee, that would be the case of the court charging at least or the court accounting at least

[00:21:02] Speaker 00:
80,000 distinct violations, which if you just do that for 80,000 violations one day at the second tier of penalty would amount to, I believe it was $2.5 billion in penalty that FAR exceeds.

[00:21:15] Speaker 02:
So this is the more lenient approach, actually?

[00:21:18] Speaker 04:
Indeed.

[00:21:19] Speaker 04:
Okay.

[00:21:19] Speaker 04:
How many victims were there?

[00:21:21] Speaker 00:
Over 80,000.

[00:21:22] Speaker 00:
I don't have the precise number, but I know it was over 80,000 consumers.

[00:21:24] Speaker 04:
And that was established?

[00:21:26] Speaker 00:
Correct.

[00:21:27] Speaker 00:
Undisputed by Mr. Wen.

[00:21:28] Speaker 04:
Okay.

[00:21:31] Speaker 00:
And I'll just also note, Your Honor, to Judge Johnstone, district courts do have discretion to consider what constitutes a violation in a particular case and setting the penalty.

[00:21:46] Speaker 00:
It's consistent with this court's decision in the SEC v. Murphy case, the 2022 case.

[00:21:52] Speaker 00:
There, the court noted that district courts have discretion to determine what counts as a violation and can use various proxies, including

[00:22:01] Speaker 00:
the number of investors, number of fraudulent transactions.

[00:22:03] Speaker 00:
That was an SEC case, but a similar statutory scheme.

[00:22:09] Speaker 00:
I'll turn back now with the time I have to just discuss the, I'd like to correct just a couple of things that Mr. Isaacs raised about the motion to reopen Discovery.

[00:22:20] Speaker 00:
I think your honors questions make it clear that you understand there was no abusive discretion on the part of the district court in denying that motion.

[00:22:28] Speaker 00:
I'll just note briefly, though, that there's evidence in the record that when Mr. Wen was confined in FCI Sheridan, where he claims now that he was effectively incommunicado, there's evidence showing that Mr. Wen simply refused communications with plaintiff's counsel, which prompted a motion to compel.

[00:22:44] Speaker 00:
The court did order him to compel responses to discovery.

[00:22:47] Speaker 00:
It's detailed at 1ER71 in the district court's order denying the motion to reopen discovery.

[00:22:54] Speaker 00:
Mr. Isaac says that Mr. Wen didn't receive Mr. Kim's declaration until the motion for summary judgment.

[00:23:01] Speaker 00:
That's false.

[00:23:01] Speaker 00:
Mr. Wen was served with Mr. Kim's declaration in October of 2022 while he was at the residential reentry facility where he also had access to email, including showing that he responded to plaintiffs' discovery requests, written discovery requests in October of 2022.

[00:23:20] Speaker 00:
I'll turn now to addressing the motion for summary judgment.

[00:23:24] Speaker 00:
So there is no dispute on appeal that Mr. Wen is liable for the period after June 2017.

[00:23:31] Speaker 00:
The only thing that he disputes on appeal is whether he is liable for the period between November 2015 and June 2017.

[00:23:37] Speaker 00:
And there is a plethora of undisputed evidence in the record to show that Mr. Wen was both directly liable and liable as a substantial assister in violation of the TSR and the CFPA.

[00:23:49] Speaker 00:
To establish that he was directly liable for the violations, plaintiffs had to prove that he participated directly in the violation or had authority to control them, and then also that he was at least recklessly indifferent.

[00:24:00] Speaker 00:
Substantial assistance is actually a lower standard.

[00:24:02] Speaker 00:
We only had to prove that he provided some substantial assistance to the company and also had some reckless indifference to the company's conduct.

[00:24:10] Speaker 00:
I'll note that Mr. One barely addresses the substantial assistance standard in his briefing, perhaps because it's very clear that the standard here is met.

[00:24:18] Speaker 00:
And so I'll walk quickly through the evidence of his authority to control and substantial assistance before turning to the mental element.

[00:24:25] Speaker 00:
So on authority to control, first there are documents that show that Mr. Wen was the company's general counsel beginning in November of 2015.

[00:24:33] Speaker 00:
He was also listed on a document as the company's chief financial officer.

[00:24:37] Speaker 00:
He was a signatory on bank accounts and merchant accounts, including accounts that were active between 2015 and 2017.

[00:24:46] Speaker 00:
He was an equal owner of the company with Mr. Kim from the very beginning.

[00:24:50] Speaker 00:
That was a point that he conceded in his own declaration opposing the motion for summary judgment.

[00:24:55] Speaker 00:
And he responded to or reviewed consumer complaints, including during the period that he calls period one.

[00:25:03] Speaker 00:
For substantial assistance, all of that evidence clearly shows that he had the authority to speak for and sign documents on behalf of the company, which shows the requisite ability to control it for direct liability.

[00:25:14] Speaker 00:
For substantial assistance, all plaintiffs had to establish is that he provided more than mere casual or incidental assistance to the company.

[00:25:21] Speaker 00:
Again, here he was the company's general counsel.

[00:25:24] Speaker 00:
In his own declaration, he notes that he provided help with budget issues.

[00:25:28] Speaker 00:
That is enough, more than enough to meet that threshold.

[00:25:32] Speaker 00:
With respect to the mental element, again, there's plenty of undisputed evidence in the record to show that Mr. Wen knew of or consciously avoided knowing of the company's violations.

[00:25:41] Speaker 00:
That's shown by a November 2015 agreement that Mr. Wen signed as general counsel, acknowledging that the company had to comply with the telemarketing sales rule and the Consumer Financial Protection Act.

[00:25:53] Speaker 00:
Again, he's the general counsel, and yet he took no steps to ensure the company complied with those laws.

[00:25:59] Speaker 00:
He also discussed the company's fee schedule with Mr. Kim in an email in period one, that's in April of 2016, that emails at 1SER95.

[00:26:11] Speaker 00:
Mr. Wen also acknowledged in his declaration that Mr. Kim had made him aware of the alterations to consumers' family sizes in their income-driven repayment plan applications.

[00:26:22] Speaker 00:
And again, he reviewed and responded to consumer complaints, including consumer complaints that

[00:26:27] Speaker 00:
acknowledged that the company had charged illegal upfront fees.

[00:26:30] Speaker 00:
And he responded to a consumer who complained that she had been scammed because the company inflated her family size on the loan application.

[00:26:40] Speaker 00:
And also, all of this evidence is only what remains after Mr. Wen undisputedly deleted company emails and his text messages through the course of this proceeding.

[00:26:50] Speaker 00:
So all of this evidence is sufficient to show that Mr. Wen was liable both

[00:26:55] Speaker 00:
directly liable and as a substantial assister in violation of those laws.

[00:27:01] Speaker 00:
Unless Your Honors have any further questions, we ask that you affirm the judgment below.

[00:27:06] Speaker 04:
Thank you, Counsel.

[00:27:07] Speaker 00:
Thank you.

[00:27:11] Speaker 01:
Thank you, Your Honors.

[00:27:20] Speaker 01:
Real quick on this issue of the cryptocurrency,

[00:27:25] Speaker 01:
I believe counsel said that this is new evidence that Mr. Nguyen is putting forth, and that's not correct.

[00:27:33] Speaker 01:
The district court's contempt order was entered on January 6, 2023.

[00:27:38] Speaker 01:
It had included in it two purgation provisions with a deadline of January 17, 2023.

[00:27:47] Speaker 01:
And this required Mr. Wen to make detailed disclosures.

[00:27:51] Speaker 01:
He, in fact, filed a lengthy and detailed declaration on January 17, 2023, prior to the deadline,

[00:28:00] Speaker 01:
And since that time, neither the CFPB nor the receiver have ever challenged that showing made by Mr. Wen.

[00:28:10] Speaker 01:
So we have two and a half years during which they've never challenged it.

[00:28:14] Speaker 01:
They've not produced any evidence that he is somehow still holding cryptocurrency secretly.

[00:28:23] Speaker 01:
And furthermore,

[00:28:25] Speaker 01:
The contempt order provided for $1,000 a day sanction if Mr. Wen failed to purge himself.

[00:28:34] Speaker 01:
The district court was never asked to impose that sanction, never did.

[00:28:38] Speaker 01:
That ruling merged with the final judgment.

[00:28:41] Speaker 04:
What should we do about that motion?

[00:28:43] Speaker 04:
Should we do a limited remand or?

[00:28:46] Speaker 01:
I think certainly, well, that motion has now been under submission, or sorry, was filed, I think in August it'll be two years, and in September it'll be under submission for two years.

[00:28:58] Speaker 01:
That's the receiver's motion, post-judgment, to have Mr. Wen held in contempt.

[00:29:05] Speaker 01:
When we came into the case, we supplemented, we filed a supplemental memo asking that

[00:29:11] Speaker 01:
the district court deny the motion and also find that Mr. Wen had purged himself of the contempt which by complying with the purgation provisions, these are the district court purgation provisions, nobody's challenged the showing that he made and I think that goes exactly to this issue of his financial resources to satisfy a 148 million dollar civil penalty.

[00:29:36] Speaker 04:
If it's a post-judgment motion though, I mean,

[00:29:39] Speaker 04:
not something that we can consider.

[00:29:42] Speaker 01:
Well, the CFPB raised that issue to try to support the district court's determination that Mr. Wen still had access to substantial resources in order to satisfy this penalty.

[00:29:59] Speaker 01:
He's already turned over more than ten million dollars in assets, including considerable assets that were not the product of this scheme.

[00:30:09] Speaker 01:
which according to Mr. Wen, he only received about 1.5 million.

[00:30:15] Speaker 01:
If I may have just one more minute to address a couple of the other issues.

[00:30:20] Speaker 01:
As far as that time period goes where Mr. Wen contends that he's not liable,

[00:30:25] Speaker 01:
The issue is what he knew and when he knew it.

[00:30:28] Speaker 01:
And that really comes down to the Mr. Kim's declaration versus Mr. Wen's 49 page declaration.

[00:30:37] Speaker 01:
And if you look at Mr. Kim's declaration and Mr. Nguyen's declaration carefully,

[00:30:41] Speaker 01:
you will see that there's really, and including the exhibits that supposedly support it, there's nothing in there prior to 2018 to show that Mr. Wen was actively involved in the operation.

[00:30:53] Speaker 01:
This was really Mr. Kim's enterprise.

[00:30:56] Speaker 01:
Mr. Wen became involved.

[00:30:57] Speaker 01:
He's not contesting that he would have become liable after June of 2017.

[00:31:04] Speaker 01:
But for that prior period, which is important in determining

[00:31:08] Speaker 01:
the amount of the civil penalty for sure, there are definitely issues of material fact.

[00:31:16] Speaker 01:
If the court doesn't have any other questions, I would submit.

[00:31:19] Speaker 04:
All right.

[00:31:20] Speaker 04:
Thank you, counsel.

[00:31:21] Speaker 01:
Thank you very much, your honors.

[00:31:23] Speaker 04:
CFPB versus Nguyen is submitted, and I'm going to see if counsel for Wong versus Bondi is here.