On Thursday, a memorandum was filed in the Ninth Circuit Court of Appeals in USSEC vs. Robert Yang, et al. as a result of the defendants’ appeal of the district court’s judgment that imposed disgorgement and civil penalties.
The opinion recounted that the Securities and Exchange Commission filed the suit against medical provider HealthPro Capital Partners, LLC, Robert Yang, Claudio Kano, Celtic Bank, Yanrob’s Medical, Inc., and Suncor Care, Inc. for the mishandling of investor’s funds. According to the memorandum, HealthPro used these funds in the Suncor Lynwood Project to “pay down a construction loan related to a different project, the Suncor Fontana facility.”
Defendant Yang argued that he was unjustly grouped with the other defendants, but the court decided that since he “misappropriated investor funds and transferred them to Yanrob,” which he owned, he was liable for the entire amount of misappropriated funds. Thus, he is individually liable for disgorgement of $1,414,250.
The court affirmed the district court’s decision to set disgorgement at the aforementioned amount, and also their decision to charge Yang a total of $1,938,600 for civil penalties which is equivalent to Yang’s “gross amount of pecuniary gain.” The Ninth Circuit shot down Yang’s argument that the penalty was disproportionate to his wrongdoing by noting how his scheme caused “substantial harm,” as his investors lost more than $13 million due to his actions. Thus, the Ninth Circuit confirmed that the district court’s ruling was reasonable.
The Ninth Circuit affirmed the district court’s ruling, so defendant Robert Yang will have to pay more than $3.3 million in total damages.