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The full case caption appears at the end of this opinion. OPINION OF THE COURT McKEE, Circuit Judge. Defendants appeal the grant of a permanent injunction inthis civil action for securities fraud. The defendants arguethat the instruments that they offered to investors were not”securities” under federal law, and that the district courttherefore lacked subject matter jurisdiction. The defendantsalso challenge certain evidentiary and procedural rulingsthat the district court made during the hearing on themotion for a permanent injunction. For the reasons thatfollow, we will affirm. I. In November 1995, defendants Geoffrey Benson andGeoffrey O’Connor formed the Infinity Group CompanyTrust (the “Trust” or “TIGC”). [FOOTNOTE 1] Thereafter, the Trust unveiledan “Asset Enhancement Program” that offered investors anopportunity to invest with the expectation of exceedinglyhigh return and minimal risk. Investors in TIGC were askedto execute “property transfer contracts” pursuant to whichthe investors contributed substantial sums of money to theTrust for the Trust to invest. TIGC guaranteed investorsthat they would receive an annual rate of return rangingfrom 138% to 181% depending on the amount of theparticipant’s principal investment. [FOOTNOTE 2] The guarantees werebased upon the Trust’s purported performance experience,financial connections, and the ability to pool large amountsof money. Participants were promised that their principalwould be repaid upon demand. Once the property transfercontracts were executed, the transferred funds becameassets of the Trust and were subject to investment at thesole discretion of the Board of TIGC. TIGC’s solicitation was successful. It raisedapproximately $26.6 million from over 10,000 investorsnationwide. However, TIGC only invested $12 million of thefunds it received pursuant to the property transfercontracts, and it never earned a profit on the funds it didinvest. [FOOTNOTE 3] Rather, the Trust sustained mounting loses that itfailed to disclose to investors. The district court describedwhat happened as follows:
TIGC also used over $2 million in so-called downline commissions to keep the engine of this enterprise humming like a new Mercedes on the autobahn. In the time-dishonored tradition of Charles Ponzi, TIGC substituted new investors’ money for real investment return on old investors’ funds. The rest of TIGC’s expenditures were even less investment-related. More than $816,000 was spent on real estate, a significant portion of which went to the purchase and development of a personal residence for Geoffrey and Susan Benson . . . the purchase or lease of cars for their garage, . . . a $6,133.46 spending spree at Circuit City; more than $2,000 spent at television retailers; over $50,000 in ‘household expenses’; $5,000 to pay off a home mortgage; $10,000 to pay off personal credit card bills; $10,000 for school tuition for the Bensons’ son; as well as hundreds for jewelry, bowling equipment and membership fees, [sic] groceries. In short, the Bensons used TIGC as their personal checking account. In addition, Geoffrey Benson made an undisclosed donation of $1.265 million of investor funds to Lindsey K. Springer, d/b/a Bondage Breaker Ministries. In addition to all this, defendants Geoffrey Benson and Geoffrey O’Connor paid themselves nearly $300,000 in cash from TIGC’s funds, none of it reported to the Internal Revenue Service or even documented on TIGC’s books– which did not exist. Lastly, more than $1.9 million remains unaccounted for, . . . . [FOOTNOTE 4]

SEC v. Infinity Group Co., 993 F.Supp. 324, 325-26 (E.D.Pa.1998) (original footnote omitted). On August 27, 1997, the SEC filed the instant complaintin the United States District Court for the Eastern Districtof Pennsylvania charging “an ongoing scheme, directed byBenson and O’Connor, to defraud public investors throughthe offer and sale of TIGC securities, in the form ofinvestment contracts,” App. 41a, in violation of Section 22of the Securities Act of 1933, 15 U.S.C. 77v, and Sections21 and 27 of the Securities Exchange Act of 1934, 15U.S.C. 78u & 78aa. The Commission sought a permanentinjunction, a freeze of the assets of TIGC, appointment of aTrustee to manage the affairs of TIGC, and an orderrequiring defendants, and certain third parties (the”reliefdefendants”) to disgorge assets of TIGC that had beenimproperly transferred.[FOOTNOTE 5] On September 5, 1997, after a hearing, the district courtissued an Order for Preliminary Injunction, Appointment ofTrustee, and Freeze of Assets and Other Relief. Althoughthe Trust’s funds and assets were frozen, the September 5Order provided for the release of funds to pay legalexpenses and fees, as well as defendants’ living expenses.On February 6, 1998, the district court entered afinaljudgment against the defendants enjoining them fromfurther violations of the securities laws and orderingdisgorgement of all amounts contributed to the Trust by theTrust participants. This appeal followed. II. Defendants raise four issues on appeal. First, they arguethat the property transfer contracts that were used as an”investment” vehicle here were not “securities” underfederal securities laws, and therefore that the district courtlacked subject matter jurisdiction. Second, they argue thatinasmuch as they sincerely believed in the investments thatTIGC made, there can be no liability for securities fraud.Third, they allege that the district court erred in denyingtheir concededly untimely demand for a jury trial. Lastly,they contend that several allegedly erroneous proceduraland evidentiary rulings constitute reversible cumulativeerror even though the rulings were harmless whenconsidered separately. We will discuss each argument inturn. III. We must first address the defendants’ claim that thedistrict court lacked subject matter jurisdiction because the”property transfer contracts” were not “securities” underfederal securities laws. Inasmuch as this is an appeal froma final judgment, we have jurisdiction to review the districtcourt’s decision under 28 U.S.C. S 1291. We exerciseplenary review over a district’s ruling on a motion todismiss for lack of subject matter jurisdiction. DelawareValley Citizens Council v. Davis, 932 F.2d 256, 264 (3d Cir.1991).[FOOTNOTE 6] It is well established that federal securities laws onlyapply to the purchase or sale of “securities” as definedtherein. Steinhardt Group Inc. v. Citicorp, 126 F.3d 144, 150(3d Cir. 1997).

‘[S]ecurity’ means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, . . . investment contract, voting-trust certificate, . . . any interest or instrument commonly known as a ‘security’, or any certificate of interest or participation in, . . . or right to subscribe to or purchase, any of the foregoing.

15 U.S.C. S 77b(a)(1) (emphasis added). The propertytransfer agreements that TIGC’s investors executedcertainly appear to be “investment contract[s],” however”[t]he term investment contract has not been defined byCongress, nor does the legislative history to the 1933 and1934 Acts illuminate what Congress intended by the terminvestment contract.” Steinhardt, 126 F.3d at 150-51. InSEC v. W.J. Howey Co., 328 U.S. 293 (1946), the SupremeCourt provided a framework for determining when suchagreements are subject to federal law. The Court stated:

[A]n investment contract for purposes of the Securities Act means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical assets employed in the enterprise.

Howey, 328 U.S. at 298-99. Thus, the property transfercontracts between TIGC and its investors are securities ifthey were (1) “an investment of money,” (2)”in a commonenterprise,” (3) “with profits to come solely from the effortsof others.” Id. at 301, Steinhardt , 126 F.3d at 151. Defendants agree that the property transfer contractssatisfy the first and third prongs of the Howey test. Indeed,they can hardly deny it. There clearly was an investment ofmoney because the contracts required and evidenced themonetary transfer solely for the purposes of receiving the”guaranteed” return of between 138% and 181%. SeeSteinhardt, 126 F.3d at 151 (finding prong one met wherean investment was made with the expectation of an 18%return on investment). Similarly, the third prong is clearlysatisfied here because the expected return was to be “withprofits to come solely from the efforts of others.” Id.(quoting Howey, 328 U.S. at 301). Our focus under the third prong is whether “thepurchaser [is] attracted to the investment by the prospect ofa profit on the investment rather than a desire to use orconsume the item purchased.” Id. at 152. TIGC’s investorsdid not intend to consume anything in return for the moneythey gave to TIGC. Whether the investor has “meaningfullyparticipated in the management of the partnership in whichit has invested such that it has more than minimal controlover the investment’s performance” is also relevant underthe third prong. Id. TIGC concedes that”the TIGC Boardretained exclusive control over the investment decision.”Appellant’s Br. at 18. Thus, the participants were passiveinvestors who exercised no control over the funds they gaveto TIGC. Those investors depended upon the managerialdecisions of others. Therefore, we agree that thefirst andthe third prongs have been satisfied,[FOOTNOTE 7] and we will focus ouranalysis upon the “common enterprise,” or second prong, ofthe Howey test. We have held that the common enterprise requirement issatisfied by “horizontal commonality.”[FOOTNOTE 8] Horizontalcommonality is characterized by “a pooling of investors’contributions and distribution of profits and losses on apro-rata basis among investors.” Steinhardt , 126 F.3d at151 (quoting Maura K. Monaghan, An Uncommon State ofConfusion: The Common Enterprise Element of InvestmentContract Analysis, 63 Fordham L.Rev. 2135, 2152-53(1995) (footnotes omitted)). See also Salver v. Merrill Lynch,Pierce, Fenner & Smith, 682 F.2d 459, 460 (3d Cir. 1982)(holding that a commodity account is not a “security”because it is not part of a pooled group of funds). Here, itis undisputed that TIGC’s solicitation and membershipmaterials stated that TIGC would pool participantcontributions to create highly-leveraged investment powerthat would yield high rates of return while protecting theinvestors’ principal contributions. For example, the Trust’sPrivate Member Material and Manual represents:

The Infinity Group Company invests for profit by accepting amounts as low as [$1200] from thousands of people like you, and creating large blocks of funds that are in the millions of dollars. This gives the Trust a leverage position whereby we can command large profits, and have the security of never putting the principal at risk. This is very sophisticated investing that cannot be accomplished unless you have millions of dollars to deposit in a top world US bank.

App. 261a. However, TIGC argues that commonality isnevertheless lacking because the investors did not”shareproportionately in the profits or losses of TIGC or thevarious investment programs,” Appellant’s Br. at 19(emphasis omitted). Rather, TIGC asserts that “eachparticipant would execute an individual contract with TIGCproviding for a fixed return, payable on demand (principalonly) or on a specific date. . . .” Id. According to TIGC:

[T]he property transfers were obligations of TIGC to repay the other party to the contract at a specific time, and did not represent a direct interest in TIGC, any other entity or a specific security or investment vehicle. . . . The property transfers were not earmarked for any particular purpose, or even any particular type of investment. . . . Under these contracts, the TIGC Board retained exclusive control over the investment decision and participants were not promised that their funds would be invested in any particular investment program.

Id. at 18 (internal citations omitted). However, TIGC’s denial of horizontal commonality iscontrary to the record. By the plan’s very terms, the returnon investment was to be apportioned according to theamounts committed by the investor. Each investor’sapportionment of profits was represented by certain “capitalunits” obtained in exchange for executing a “propertytransfer agreement.” The number of units an investorpurchased was, of course, dependent upon the size of hisor her investment and the investor’s return was directlyproportional to the amount of that investment. TIGC’ssolicitation materials stated:

[W]ith the Private Trust, what you will be doing is making a Property Transfer into the Trust in exchange for 1 Capital Unit for every $100 deposit. In turn the Trust guarantees that you will make a certain annual dividend. These dividends are a minimum of 20% up to 181% depending on the amount of Capital Units you hold.

Supp. App. 77. The materials also stated that “[d]ividendsare dispersed . . . as the assets of the Trust increase andas the Board of Trustees elects to pay guaranteeddividends,” App. 261a. TIGC seeks to negate the obvious import of its structureby arguing that there are technical characteristics thatdistinguish the instruments involved here from those thatare “securities.” We are not persuaded. The defendants’claim that the property transfer contracts do not constitute”investment contracts” because the investors were toreceive a fixed rate of return rather than a rate dependenton the success of the investments. The defendants argue:

[I]f the aggregate value of the investments increased, each contract holder would not share in the appreciation. Rather, they would receive only their fixed, contractually agreed-upon return. . . . Similarly, if the value of TIGC investments decreased, the contract holder would still be entitled to the agreed- upon, fixed return on his or her property transfer contract. . . . In the event that the value of the investments dropped below the ability of TIGC to honor its commitment to a specific individual, the participants would not share proportionately (‘pro rata’) in the shortfall.

Appellant’s Br. at 19 (internal citations omitted). However,the definition of security does not turn on whether theinvestor receives a variable or fixed rate of return. See ElKhaden v. Equity Securities Corp., 494 F.2d 1224, 1229(9th Cir. 1974) (that expected profits remain constant whilerisk of loss varies does not remove a plan from thedefinition of a security); National Bank of Yugoslavia v.Drexel Burnham Lambert, Inc., 768 F.Supp 1010, 1016(S.D.N.Y. 1991) (holding that time deposits made forinvestment purposes in return for a fixed rate of interestwere investment instruments rather than consumer orcommercial bank loans). Profits can be either “capital appreciation resulting fromthe development of the initial investment” or earningscontingent on profits gained from the use of investors’funds. United Housing Foundation, Inc. v. Forman , 421 U.S.837, 852 (1975). The mere fact that the expected rate ofreturn is not speculative does not, by itself, establish thatthe property transfer contracts here are not “investmentcontracts” within the meaning of federal securities laws.See Howey, 328 U.S. at 301 (explicitly rejecting the theorythat a non-speculative enterprise cannot be considered aninvestment contract; “it is immaterial whether theenterprise is speculative or non-speculative”). Moreover, the transactions here are easily distinguishedfrom those in Marine Bank v. Weaver, 455 U.S. 551 (1982),where the Supreme Court held that FDIC-protectedcertificates of deposit offering a fixed rate of return were notsecurities. There, the Supreme Court stated that Congress”did not intend to provide a broad federal remedy for allfraud.” Id. at 557. The Court reasoned that certificates ofdeposit issued by federally-regulated banking institutionsdiffered from other long-term debt obligations in partbecause “[i]t is unnecessary to subject issuers of bankcertificates of deposit to liability under the antifraudprovisions of the federal securities laws since the holders ofbank certificates of deposit are abundantly protected underfederal banking laws,” Id. at 559. The Court noted that a”purchaser of a certificate of deposit is virtually guaranteedpayment in full,” Id. at 551. Here, TIGC’s investors wereoffered no such protection.[FOOTNOTE 9] “The crux of the Marine Bankdecision is that federal banking regulations and federaldeposit insurance eliminate the risk of loss to the investor,therefore obviating the need for protection of the federalsecurities laws,” Gary Plastic Packing Corp. v. Merrill Lynch,756 F.2d 230, 240 (2d Cir. 1985).[FOOTNOTE 10] As will become moreevident in our discussion of TIGC’s “investment” in certainrailroad bonds, the investors here were guaranteed nothingdespite TIGC’s purported guarantee of principal.”Thefundamental purpose undergirding the Securities Acts is ‘toeliminate serious abuses in a largely unregulated securitiesmarket,’ ” Reves v. Ernst & Young, 494 U.S. 56, 60 (1990)(quoting United Housing, 421 U.S. at 849 (distinguishingMarine Bank where no risk-reducing factor was present)).

The aim is to prevent further exploitation of the public by the sale of unsound, fraudulent, and worthless securities through misrepresentation; to place adequate and true information before the investor; to protect honest enterprise, seeking capital by honest presentation, against the competition afforded by dishonest securities offered to the public through crooked promotion. . . .

S.Rep. No. 47, 73d Cong., 1st Sess., at 1 (1933). We take a flexible and realistic approach in determiningwhen a particular scheme requires the protection of federalsecurities laws. For example, in Howey, the defendant owned large tractsof citrus acreage that it sold to the public. Purchasers ofthe tracts received land sales and service contracts and,upon full payment of the purchase price, the land wasconveyed by warranty deed. However, under thearrangement between Howey and the purchasers, aservicing corporation was given “full and complete”possession of the acreage, and full discretion to grow,harvest, and market crops grown on the tracts with verylittle accountability to the purchaser. The SEC instituted anaction against Howey because the corporation had notcomplied with the registration requirements of federalsecurities laws. Howey defended by arguing thatregistration was not required because it was not selling”securities” under federal law. The “lower courts . . . treatedthe contracts and deeds as separate transactions involvingno more than an ordinary real estate sale and anagreement by the seller to manage the property for thebuyer,” Howey, 328 U.S. at 297-98, and concluded thatthey did not constitute “securities” under federal law.However, the Supreme Court disagreed because Howey wasnot merely offering fee simple interests in land coupled witha contract for management services. Rather, the Courtconcluded that Howey was offering “an opportunity tocontribute money and to share in the profits” of theenterprise. Id. at 299. “[The purchasers were] attractedsolely by the prospects of a return on their investment,”and the land sales contracts and warranty deeds weremerely a “convenient method” by which to apportion profits.Id. at 300. Thus, the Court concluded that the agreementswere securities. The Court reasoned:

The investors provide the capital and share in the earnings and profits; the promoters manage, control and operate the enterprise. It follows that the arrangements whereby the investors’ interests are made manifest involve investment contracts, regardless of the legal terminology in which such contracts are clothed.

Id. (emphasis added). See also SEC v. C.M. Joiner LeasingCorp., 320 U.S. 344 (1943) (finding that a defendant sellingassignment of oil leases was “not as a practical matteroffering naked leasehold rights,” instead “the (oil)exploration enterprise was woven into these leaseholds, inboth an economic and a legal sense; the undertaking todrill a well runs through the whole transaction as thethread on which everybody’s beads were strung.”) Here, the investors’ beads were strung upon thegossamer guarantee of seemingly impossibly high returnsat no risk. The fact that TIGC promised a “fixed rate ofreturn” based upon the amount invested is irrelevant. Wewill not embroider a loophole into the fabric of thesecurities laws by limiting the definition of”securities” in amanner that unduly circumscribes the protection Congressintended to extend to investors. Rather, we must scrutinizethese “property transfer contracts” in a manner that”permits the fulfillment of the statutory purpose ofcompelling full and fair disclosure relative to the issuanceof the many types of instruments that in our commercialworld fall within the ordinary concept of a security.”Howey, 328 U.S. at 299 (internal quotation marks andcitation omitted). Our inquiry:

embodies a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits.

Id. We must consider that Congress “enacted a definition of’security’ sufficiently broad to encompass virtually anyinstrument that might be sold as an investment,” Reves,494 U.S. at 61. The securities laws were intended toprovide investors with accurate information and to protectthe investing public from the sale of worthless securitiesthrough misrepresentations. H.R.Rep. No. 85, 73d Cong.,1st Sess., at 1-5 (1933). As noted above, TIGC acceptednearly $26.6 million from approximately 10,000 investors.TIGC persuaded those investors to part with their cash byguaranteeing the proverbial “blue sky;” fantastic profit at norisk. Of the $26.6 million raised, more than half of themoney was used to satisfy the material “needs” of theindividual defendants. The balance was poured down emptywells that could hardly be confused with prudentinvestments. TIGC realized no return whatsoever on those”investments.” Given the totality of the circumstances here,the property transfer contracts clearly constitute securities,and the district court therefore had subject matterjurisdiction. IV. Defendants argue that the SEC failed to establish thescienter required for liability under Section 17(a) of theSecurities Act,[FOOTNOTE 11] Section 10(b) of the Exchange Act[FOOTNOTE 12] or Rule10b-5.[FOOTNOTE 13] They argue that they cannot therefore be liableeven if the property transfer contracts were securities. The SEC must establish the requisite scienter toestablish securities fraud. Ernst & Ernst v. Hochfelder, 425U.S. 185, 193 (1976); Newton v. Merrill, Lynch, Pierce,Fenner & Smith, Inc., 135 F.3d 266, 272-73 (1998); McLeanv. Alexander, 599 F.2d 1190, 1196-97 (3d Cir. 1979).Scienter is “a mental state embracing intent to deceive,manipulate or defraud,” Hochfelder, 425 U.S. at 193 n.12;McLean, 599 F.2d at 1197. We have previously held thatthe scienter required for securities fraud includesrecklessness, and we have adopted the definition ofrecklessness set forth in Sundstrand Corp. v. Sun ChemicalCorp., 553 F.2d 1033 (7th Cir. 1977). See also Sharp v.Coopers & Lybrand, 649 F.2d 175, 1993 (3d Cir. 1981).[FOOTNOTE 14]Accordingly, recklessness includes:

[H]ighly unreasonable (conduct), involving not merely simple, or even inexcusable negligence, but an extreme departure from the standards of ordinary care, . . . which presents a danger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been aware of it.

McLean, 599 F.2d at 1197 (citing Sundstrand Corp., 553F.2d at 1045). The SEC argues that scienter is evidenced by TIGC’sguarantees of high rates of return that were unsupportedby any honest due diligence. The defendants, on the otherhand, contend that their actions “were entirely consistentwith the fact that they believed their representations (in theTrust literature and elsewhere) [to be] true.” Appellant’s Br.at 23. However, good faith, without more, does notnecessarily preclude a finding of recklessness. Therefore,even if the defendants believed TIGC’s investments weresound, they may still be liable for securities fraud if theirbelief was based upon nothing more than a recklessdisregard of the truth. Moreover, we reiterate that TIGCinvested less than half of the money obtained under theproperty transfer contracts. In addition, a minimum of$3,649,000 of the funds was spent on such things as theBensons’ home, a new Mercedes Benz, etc. Nevertheless,the defendants claim that they “attempted to obtaindocumentation and contractual guarantees from theinvestment providers” and “were [themselves] the victims offraud on the part of the investment providers.” Id. at 29-30.We are not persuaded. The defendants concede that no profits were ever realizedfrom the funds that were actually invested. Appellant’s Br.at 11. One need look no further than one example of aninvestment that TIGC made to understand why no profitwas ever realized and to appreciate the specious nature ofthe denials of recklessness. In October 1996, TIGCpurchased a bond of the Marietta and Northern GeorgiaRailway that had been issued in 1889. TIGC paid $302,000for that bond, apparently based upon “unsubstantiatedboasts of value ranging from $35 million to $107 million,and without performing any meaningful type of duediligence inquiry to clarify the $72 million discrepancy.”Appellee’s Br. at 28. TIGC paid $302,000 even though thebond had a face value of only $1000. Despite the uniqueinvestment acuity proclaimed in the Trusts’ materials, thedefendants missed a little glitch in this investmentbonanza. The railroad that issued the bond had gonebankrupt in 1895, and it had ceased to exist in 1896.Supp. App. 1-4. The bond was therefore “worthless exceptfor its modest value as a collectible (which [was] estimatedat $80-100.).” Appellee’s Br. at 29. Thus, TIGC used aportion of those funds that it did not divert to personal useto pay $302,000 for a bond with a face value of $1,000 thathad been issued by a railroad that had gone out ofbusiness 100 years ago.[FOOTNOTE 15] In referring to this investment thedistrict court stated:

[W]e suspect that even a complete neophyte infinance, accounting, or economics would suspect, when confronted with such an investment, that defendants’ business was on the wrong track. Instead, TIGC chose in its materials to value the ancient bond at $107 million!

993 F.Supp. at 330. It is a small wonder that the districtcourt referred to TIGC as a “financial train wreck.” Id. at326. Yet, TIGC’s offering materials proclaimed that theunique skill it provided would enable the Trust toguarantee very high rates of return with no risk toprincipal. The solicitation materials boasted thatparticipants would have “an opportunity that has a 100%success rate, for 100% of the people who become associatedwith my business.” Supp. App. 74. Investors were told thattheir investments were “guaranteed by a top 100 WorldBank” and “the returns (Profits) that (TIGC based) the[return rate of] 138% and 181% on (were) guaranteed bythe Trust, making this one of the safest programsavailable.” App. 271a (emphasis omitted). Even if we indulge the defendants and assume arguendothat they believed in these guarantees, we neverthelessmust examine the foundation such a belief would haverested upon. A good faith belief is not a “get out of jail freecard.” It will not insulate the defendants from liability if itis the result of reckless conduct. See McLean. [FOOTNOTE 16] However,under our standard of review, we must view the evidence inthe light most favorable to the SEC as verdict winner.Eisenberg v. Gagnon, 766 F.2d 770, 778 (3d Cir. 1985). Indoing so, we readily conclude that the district court did noterr in finding that the SEC had established the necessaryscienter for securities fraud. The district court stated:

[W]e reject Geoffrey Benson’s proffered defense that he was ignorant of the falsity of TIGC’s statements, and in all events he acted in good faith in soliciting investor funds and pursuing investments on behalf of TIGC. Even assuming that those statements are true–and we do not, given the mountain of evidence of invidious motive here–ignorance provides no defense to recklessness where a reasonable investigation would have revealed the truth to the defendant. . . . Similarly, good faith is no shield to liability under the antifraud provisions of the Securities Acts. . . . But we need not rely on either the ignorance defense, or the existence of recklessness, in Geoffrey Benson’s case. His actual intent to defraud may be inferred from his wholly successful, and carefully-crafted, offering materials. . . . [T]he materials at length depict a mysterious cabal into which only the initiated, like TIGC’s trustees, could enter. Benson’s texts weave visions of risk-free, high-return investing in a clever tapestry of anti-government, individualist fervor. Although the offering materials often speak of mysteries and the need to maintain secrecy, in fact Geoffrey Benson and his colleagues well knew that the reason these secrets were not mentioned is because there were none. As Geoffrey Benson and O’Connor allowed their offering materials to be disseminated around the country–by fax on demand, through a legion of downline representatives, and via the mails– they had to know that they were funding payments to early investors with new investors’ money rather than with investment return. In short, Geoffrey Benson and Geoffrey O’Connor knew precisely what they were doing in these materials, and that was engaging in a hugely successful interstate fraud. At best, defendants’ investment enterprise began as a reckless financial enterprise, and evolved into an intentional scheme to defraud investors of their money when that money became necessary to prevent TIGC’s collapse. At worst, TIGC’s Asset Enhancement Program was from its inception a Ponzi scheme, calculated to bilk investors of funds by preying on their excessive greed, their feelings of exclusion from America’s current prosperity, and their fears of jackbooted government intrusion.

993 F. Supp. at 330-31.[FOOTNOTE 17] The district court’s analysis isconsistent with the record. Indeed, the record mandates thecourt’s conclusion. In McLean, we stressed that plaintiff:

[c]ircumstantial evidence may often be the principal, if not the only, means of proving bad faith. A showing of shoddy accounting practices amounted at best to a ‘pretended audit,’ or of grounds supporting a representation ‘so flimsy as to lead to the conclusion that there was no genuine belief back of it’ have traditionally supported a finding of liability in the face of repeated assertions of good faith. . . . In such cases, the factfinder may justifiably conclude that despite those assertions the ‘danger of misleading . . . (was) so obvious that the actor must have been aware of it.

Mclean, 599 F.2d at 1198 (citing Sundstrand, 553 F.2d at1045)(footnotes omitted)). Although defendants assert agood faith belief that their representations were true, “anopinion that has been issued without a genuine belief orreasonable basis is an ‘untrue’ statement which, if madeknowingly or recklessly, is culpable conduct actionableunder [the securities laws].” Eisenberg , 766 F.2d at 776(emphasis added).

When the opinion or forecast is based on underlying materials which on their face or under the circumstances suggest that they cannot be relied on without further inquiry, then the failure to investigate further may ‘support [ ]an inference that when [the defendant] expressed the opinion it had no genuine belief that it had the information on which it could predicate that opinion.’

Id. (citing McLean, 599 F.2d at 1198). Here, the evidencesupporting TIGC’s purported belief in its representations is”so flimsy as to lead to the conclusion that there was nogenuine belief ” in the validity of TIGC’s guarantee or thesoundness of its investments. McLean, 599 F.2d at 1198(citing Ultramares Corp. v. Touche, 174 N.E. 441 (N.Y.1931)). The guarantees were “ so recklessly made that theculpability attaching to such reckless conduct closelyapproaches that which attaches to conscious deception,” Id.at 1197 (citing Coleco Industries, Inc. v. Bernamn, 567 F.2d569, 574 (3d Cir. 1977)). Indeed, here, the recklessness canbe equated to conscious deception, especially when weconsider how the defendants’ primary focus was uponimproving their own (apparently lavish) lifestyle rather thanattempting to get a decent (let alone extraordinary) rate ofreturn on the investments of the participants in the Trust. The Trust failed: (1) to obtain certified financialstatements from the programs in which it invested, (2) toinquire into whether programs were insured or guaranteedby a banking institution, (3) to obtain legal opinions aboutthe legitimacy of the investment programs and (4) to obtaincertificates of good standing.[FOOTNOTE 18] We are equally unpersuaded by the defendants’ attemptsto shift the responsibility to the purported “dishonest andfraudulent activities” of the investment providers.Appellant’s Br. at 28. Although several of the investmentcompanies that TIGC did business with are now eitherdefunct or under investigation, the evidence is inconsistentwith TIGC as a mere “victim.” Rather, it appears thatseveral scoundrels were sleeping in the same bed, andthese defendants were amongst them. We doubt that it wasa mere oversight that TIGC continued to guarantee highrates of return even after defaults in $7.5 million worth oftheir investments. Thus, even if the initial guarantees werenot recklessly made, the record would still support afinding that TIGC was reckless in failing to modify itsguarantees after such massive defaults. Accordingly, wehold that the SEC presented abundant evidence of thescienter requirement of securities fraud. See McLean, 599F.2d at 1197. V. Defendants next contend that the district court erred indenying their concededly untimely demand for a jury trial.The SEC filed its Complaint on August 27, 1997. Thedefendants filed an Answer on September 26, 1997; andrelief defendants filed an Answer on October 28, 1997. Thedefendants did not file their Demand for Jury Trial untilJanuary 13, 1998; two and one half months after thefinalpleading in this case. Fed. R. Civ. P. 38 states, in pertinent part, “Any partymay demand a trial by jury of any issue triable of right bya jury by . . . serving upon the other parties a demandthereof in writing at any time after the commencement ofthe action and not later than 10 days after the service ofthe last pleading directed to such issue . . . ,” Fed.R.Civ.P.38(b). Fed R. Civ. P. 39(b) provides, “[N]otwithstanding thefailure of a party to demand a jury in an action in whichsuch a demand might have been made of right, the court inits discretion upon motion may order a trial by jury of anyor all issues.” Fed.R.Civ.P. 39(b). Therefore, a district courtmay still grant a jury trial, even where the demand wasuntimely made. We review the district court’s denial of the request for ajury trial for abuse of discretion. William Goldman Theatres,Inc. v. Kirkpatrick, 154 F.2d 66, 68 (3d Cir. 1946). “Anabuse of discretion is a ‘clear error of judgment,’ and notsimply a different result which can arguably be obtainedwhen applying the law to the facts of the case.” In re TutuWells Contamination Litigation, 120 F.3d 368, 387 (3d Cir.1997) (quoting United Telegraph Workers, AFL-CIO v.Western Union Corp., 771 F.2d 699, 703 (3d Cir. 1985)).Although we understand that the delay here may have beenpartly attributable to a change in counsel, it is neverthelessuncontested that the only justification for the delay wasattorney inadvertence. Courts in this Circuit generally denyrelief when “the only basis for such relief advanced by therequesting party is the inadvertence or oversight ofcounsel.” See Plummer v. General Elec. Co. , 93 F.R.D. 311,313 (E.D. Pa. 1981); and cases cited therein. However, thisis not a mechanical rule. Courts consider several factors in determining whether togrant an untimely jury demand. They are:

1) whether the issues are suitable for a jury; 2) whether granting the motion would disrupt the schedule of the Court or the adverse party; 3) whether any prejudice would result to the adverse party; 4) how long the party delayed in bringing the motion; and 5) the reasons for the failure to file a timely demand.

Fort Washington Resources, Inc. v. Tannen, 852 F. Supp.341, 342 (E.D. Pa. 1994). Here, in denying the untimelyrequest, the district court noted that (i) “Defendants offernothing to excuse their untimeliness except the fact thatthey switched counsel in mid-November” — a full twomonths prior to making the demand, and (ii) “the fact thatthe demand was made only two weeks before trial– andnot fully briefed until one week before trial — means thatthe Commission’s case would be greatly prejudiced by ourgranting the motion.” App. 118a. The district court did notabuse its discretion in denying the belated request for ajury trial under these circumstances. We agree that the defendants did not make an adequateshowing that the issues involved in this case wereparticularly suitable for a jury. Contrary to the defendants’assertion, we have rejected an argument for entitlement toa jury trial based upon the quantum of damages. WilliamGoldman Theatres, 154 F.2d at 69 (“evidentiary facts areintricate and will require auditing, if not an accounting[,][w]e can perceive substantial difficulties, though notinsuperable obstacles, to the framing of a charge whichproperly would submit the issue of damages to a jury”). The defendants also argue that the scheduling of theinitial preliminary injunction hearing created timepressures resulting in counsel’s failure to timelyfile a jurydemand. Specifically, they argue that after new counselentered their appearance in mid-November, “they faced thetime consuming task of absorbing and assessing the facts,the procedural posture of the case, and potential trialstrategies,” as well as conducting discovery. Appellant’s Br.at 32-33. The district court concluded that defendants’explanations “(fell) short” of excusing their untimelydemand. App. 118a-19a. We agree. We disagree, however, with the district court’s conclusionthat granting the belated jury request would havematerially prejudiced the SEC under the circumstanceshere. Nevertheless, based upon all of the factors we haveenumerated, we hold that the district court did not abuseits discretion in denying defendants’ untimely demand for ajury trial. VI. The defendants contend that the cumulative effect of fouralleged evidentiary and procedural errors impaired theirright to present and prepare an adequate defense. Thisaggregation of errors is known as the “cumulative errordoctrine.” Under that doctrine appellate courts maydetermine that, although certain errors do not require reliefwhen considered individually, the cumulative impact ofsuch errors may warrant a new trial. In other words, underthis theory, the whole is greater than the sum of its parts.However, unlike some of our sister courts of appeals,[FOOTNOTE 19] wehave rejected the cumulative error doctrine, at least in thecontext of a civil trial. See Lockhart v. Westinghouse CreditCorporation, 879 F.2d 43, 57 (3d Cir. 1989), overruled onother grounds by Starceski v. Westinghouse Elec. Corp., 54F.3d 1089 (3d Cir. 1995). Moreover, even if we were toapply the doctrine of cumulative error, we would concludethat defendants are entitled to no relief because theindividual rulings that they challenge under that doctrinewere not erroneous. A. Defendants claim that the district court erred in”cutting. . . fees for defense counsel” two days before the finalinjunction hearing and thereby “unfairly (hampering) thedefense efforts to complete discovery and to mount aneffective defense at trial.” Appellant’s Br. at 35. InNovember 1997, the district court issued a preliminaryinjunction authorizing a court-appointed trustee todisburse $125,000 for legal fees and expenses on behalf ofthe defendants from the previously frozen assets. As aresult of receiving information that the defendants wereindependently attempting to raise $175,000 to defray legalexpenses, the SEC successfully moved to modify the districtcourt’s original provision of legal fees and expenses. Twodays before the final injunction hearing began, the districtcourt granted the SEC’s motion in part, and issued anorder prohibiting defense counsel from disposing of furthertrust assets to raise funds for fees or expenses. The authority to freeze assets in receivership, in whole orin part, is committed to the district court’s sounddiscretion. Commodity Futures Trading Commission v.American Metals Exchange Corp., 991 F.2d 71, 79 (1993). Afreeze of assets is designed to preserve the status quo bypreventing the dissipation and diversion of assets. Id.(quoting SEC v. Capital Counselors, Inc., 512 F.2d 654 (2dCir. 1975)). Here, the district court’s order modifying theinitial release of legal expenses and fees was prudentinasmuch as the defendants were attempting to raise fundsto pay for legal services.[FOOTNOTE 20] In American Metals, we found noabuse of discretion where the district court denied arequest to pay attorney’s fees from frozen assets where itwas shown that the defendant had access to other fundsnot in receivership. Accordingly, we do not find abuse ofdiscretion here. B. Defendants argue that the district court erred in”arbitrarily advancing the date for the (final injunctionhearing) by two days” because defense was operating underan expedited discovery schedule and “could not afford tolose the two full days in which to prepare” for the finalinjunction hearing. Appellant’s Br. at 35. This claim iswholly without merit. Matters of docket control and scheduling are within thesound discretion of the district court. State of Alaska v.Boise Cascade Corp., 685 F.2d 810, 817 (3d Cir. 1982).Here, the district court notified both parties, over threeweeks before the originally scheduled date, that the hearingdate would have to be changed due to changes in thedistrict court’s criminal docket. We find neither”actual” nor”substantial” prejudice in the rescheduling. The change wasonly two days, and it impacted both sides. C. Defendants allege error in the court’s refusal to admit layopinion testimony from John F. Jackman, an insurancespecialist whom defendants called to testimony about”legitimate bank instruments and other investmentprograms which produce extremely high returns withminimal risk.” Appellant’s Br. at 36. The defendantscontend that Mr. Jackman’s testimony “was probative ofthe issue of whether [TIGC was] reckless or acted with anintent to defraud” and would contradict the finding that thepromised rates of return were unlikely. Id. at 37. We reviewthe exclusion of lay opinion testimony for abuse ofdiscretion. Government of the Virgin Islands v. Knight, 989F.2d 619, 629 (3d Cir. 1993). Rule 701 of the Federal Rulesof Evidence provides:

If the witness is not testifying as an expert, the witness’ testimony in the form of opinion or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding if the witness’ testimony or the determination of a fact in issue.

Fed. R. Evid. 701. A lay opinion is rationally based on thewitness’ perception and “firsthand knowledge of the factualpredicates that form the basis for the opinion.” Knight, 989F.2d at 629 (citing Fed. R. Evid. 701(a) advisory committee’snote). Here, it is uncontested that Jackman had nopersonal knowledge of the investments in question.Therefore, the court properly barred his testimony. Moreover, even though defendants now seize uponJackman’s precluded testimony to support their cries of”foul,” it is obvious that excluding his testimony did themfar more good than admitting his questionably relevantopinion would have. In his deposition, Jackman testifiedthat it was not possible to guarantee the high rates ofreturn promised by TIGC. Supp. App. 153-154. When hewas asked how he would respond to someone who offeredthe sky-high returns and guarantee of principal promisedby TIGC he responded: “I’d say you were nuts, and your[you're] inexperienced, and you don’t know what you’retalking about, and you’re a fool.” Id. at 156. It is hard to seehow the defendants were prejudiced by excluding suchtestimony. D. Finally, the defendants contend that the district courterred in excluding certain “key exhibits” that they failed tolist in the pretrial statement. Defendants assert that theadmission of the documents would have “demonstrated thatthe Defendants acted in good faith, with no intent todefraud and had exercised some care in makinginvestments.” Appellant’s Br. at 35. We review a district court’s decision to refuse to admitexhibits not previously identified for abuse of discretion.Greate Bay Hotel & Casino v. Tose, 34 F.3d 1227, 1236 (3dCir. 1994). In determining whether there has been an abuseof discretion, we consider four factors: (1) the prejudice orsurprise in fact to the opposing party, (2) the ability of theparty to cure the prejudice, (3) the extent of disruption ofthe orderly and efficient trial of the case, and (4) the badfaith or willfulness of the non-compliance. Id. (quotingBeissel v. Pittsburgh and Lake Erie R. Co., 801 F.2d 143,150 (3d Cir. 1986)). Here, the district court only excludedthose documents that the defendants failed to produce,App. 144a-45a, and the district court properly consideredthe effect that admitting the evidence would have on theSEC. The court stated, “The Commission is entitled not tobe surprised. That’s why we have all these procedures inFederal Court.” Supp. App. 59. We find no abuse ofdiscretion in that. VII. Accordingly, for the reasons set forth above, we willaffirm the district court’s Order for Final Injunction. A True Copy: Teste: Clerk of the United States Court of Appeals for the Third Circuit :::FOOTNOTES::: FN* The Honorable Murray M. Schwartz, Senior District Judge of the UnitedStates District Court for the District of Delaware, sitting by designation. FN1 Benson was the Executive Trustee Director of TIGC. O’Connor wasalso a trustee of TIGC. As Trustees of TIGC, Benson and O’Connorexercised sole discretion of the Trust’s investment programs. FN2 For property transfers of $1,200 to $50,000, the guaranteed rate ofreturn was 138%. For amounts greater than $50,000, the return ratewas 181%. FN3 Defendants contend that the money that was not invested was usedfor “operating expenses” and charitable contributions or that itconstituted “excess profits.” Appellant’s Br. at 11. The evidence at trialestablished that the money not invested was used to pay “dividends” toearlier investors and personal expenses of the Benson family. Appellee’sBr. at 12-13. FN4 The district court agreed with the SEC’s claim that the operation ofthe Trust was “the classic modus operandi of Ponzi schemes.” Appellee’sBr. at 21. For a brief explanation of the origin of”Ponzi schemes” andCharles Ponzi see Bald Eagle Area School District v. Keystone Financial,Inc., 189 F.3d 321, 324 n.1(3rd Cir. 1999), and Mark A. McDermott,Ponzi Schemes and the Law of Fraudulent and Preferential Transfers, 72Am. Bankr. L. J. 157, 158 (1998). FN5 The SEC sought disgorgement from the following relief defendants:Futures Holding Company (controlled, in part, by Benson); SLBCharitable Trust (a charitable trust established in the name of SusanBenson, Benson’s wife); Susan L. Benson (trustee of SLB and TIGC); JGSTrust (a “family trust” controlled by Benson); Lindsey Springer (managerand “legal representative” of TIGC and controller of Bondage BreakerMinistries); and Bondage Breaker Ministries. FN6 Although the district court treated defendants’ motion to dismiss forlack of subject matter jurisdiction as a Rule 12(h)(3) motion, the partieshere have treated it as a 12(b)(1) motion. We exercise plenary reviewunder either. See Nationwide Insurance Co. v. Patterson, 953 F.2d 44, 45(3d Cir. 1991) (Rule 12(h)(3) motion to dismiss is subject to plenaryreview). FN7 Even though the parties agree that the first and third prong aresatisfied, we must independently satisfy ourselves that those prongs areestablished because the inquiry is jurisdictional, and we have anindependent responsibility to insure that subject matter jurisdictionexists. See Steel Company v. Citizens for a Better Environment, 523 U.S.83, 94 (1998) (federal courts must decide jurisdictional issues “evenwhen not otherwise suggested, and without respect to the relation of theparties to it.”). FN8 Circuit courts of appeals utilize two distinct approaches in analyzingcommonality; “vertical commonality,” and “horizontal commonality.”"Vertical commonality” focuses on the community of interest between theindividual investor and the manager of the enterprise. See e.g., Long v.Acultz Cattle Co., 881 F.2d 129 (5th Cir. 1989) (“A common enterprise isone in which the fortunes of the investor are interwoven with anddependent upon the efforts and success of those seeking the investmentor of third parties” (quoting Glenn W. Turner Enterprises, Inc., 474 F.2d476, 482 n.7 (9th Cir. 1973)). “Horizontal commonality” examines therelationship among investors in a given transaction, requiring a poolingof investors’ contributions and distribution of profits and losses on apro-rata basis. See e.g., Salcer v. Merrill Lynch, Pierce, Fenner & Smith,Inc., 682 F.2d 459 (3d Cir. 1982); Cooper v. King, 114 F.3d 1186 (6thCir. 1997); SEC v. Lauer, 52 F.3d 667 (7th Cir. 1995). In Steinhardt, we declined to decide if we should adopt a verticalcommonality analysis when conducting an inquiry under thecommonality prong of Howey. Steinhardt , 126 F.3d at 151. Inasmuch aswe conclude that horizontal commonality exists here, we need not nowdecide if we should also adopt a vertical commonality analysis. FN9 TIGC’s investors are therefore like “the holder[s] of an ordinary long-term debt obligation (who) assume[ ] the risk of the borrower’sinsolvency.” Id. at 551-52. FN10 Defendants contend that “just because the property transfers atissue in this case do not constitute securities does not mean they wereexempt from any form of regulation whatsoever. Perhaps there are otherbranches of government, state or federal, with jurisdiction over TIGC, orother regulations or statutes which TIGC’s conduct violated.” Appellant’sBr. at 20. However, they do not identify any applicable regulation orstatute. This is consistent with our conclusion that this enterpriserequired the protections of federal securities laws. FN11 Section 17(a) makes it unlawful for any person in the offer or sale ofany security to: (1) “employ any device, scheme or artifice to defraud;” (2)”obtain money or property by means of any untrue statement [oromission] of material fact;” or (3) to “engage in any transaction, practiceor course of business which operates . . . as a fraud or deceit upon thepurchaser.” 15 U.S.C. S 77q(a). FN12 Section 10(b) of the Exchange Act prohibits”manipulative” or”deceptive” conduct “in connection with the purchase or sale of asecurity.” 15 U.S.C. S 78j(b). FN13 Rule10b-5 proscribes (1) the employment of any “device, scheme orartifice to defraud;” (2) the making of “any untrue statement [oromission] of material fact;” and (3) the engagement “in any act, practice,or course of business which operates . . . as a fraud or deceit upon anyperson, in connection with the purchase or sale of any security.” 17C.F.R. S 240.10b-5. FN14 The recklessness standard applies to both omissions andmisstatements. McLean, 599 F.2d at 1197. FN15 This investment was therefore the ultimate”turn around play.” FN16 We will assume that a defendant can genuinely have a subjectivebelief that demonstrates good faith even though it is the result ofreckless conduct. However, it clearly can be argued that a subjectivebelief based only upon an inquiry that is reckless can never properly beconsidered a “good faith” belief. FN17 TIGC’s materials also offered not so subtle hints that TIGC couldassist in “sheltering” assets where others with less expertise had failed.TIGC’s materials proclaimed:

If you are thinking about establishing an off-shore Trust or Bank Account please beware! Belize, the Cayman’s and may [sic] others that used to be off-shore havens are about as safe as throwing your money in the fireplace. The U.S. government has twisted most of these off-shore government’s arms to the point where they will give out information and let the U.S. do whatever they want to. We have access to off-shore facilities that are totally safe when set up properly. If you are serious, and do not mind spending some time and money, you will want to contact us to get some of the preliminary details.

Supp. App. 88-89. FN18 We also note that TIGC’s “warning of risk” was less thanforthcoming. For example, the solicitation materials stated:

Yes we do guarantee the returns you will make on your exempt security transfer. . . . (P)lease do not interpret guarantee as meaning absolutely no risk. There is no such thing. There’s a risk in getting out of bed in the morning. Or . . . a big rock could fall on Ohio and wipe out TIGC and everything else in the state. Remember, things can happen that are beyond anyone’s control.

App. 230a. FN19 See e.g., United States v. Rivera , 900 F.2d 1462, 1469 (10th Cir.1990) (“The cumulative effect of two or more individually harmless errorshas the potential to prejudice a defendant to the same extent as a singlereversible error”); Malek v. Federal Ins. Co. , 994 F.2d 49, 55 (2d Cir.1993); Frymire-Brinati v. KPMG Peat Marwick, 2 F.3d 183, 188 (7th Cir.1993); Hendler v. United States, 952 F.2d 1364, 1383 (Fed. Cir. 1991). FN20 The record indicates that Infinity investors received the followingcorrespondence from the “Freedom For America Ministry and Friends ofInfinity”:

The SEC, government, the Judge, or Trustee (It’s hard to tell any of them apart) has approved an ‘allowance’ out of YOUR ‘MONEY’ to be paid to us to live on. . . . Each and everyone of you can help with your gift to FAM, along with the completed form provided. Your gift at this time is important because the government has frozen [NOT SEIZED] all assets of TIGC and related entities which makes it impossible at this time for them to fund a Member Law Suit against the government, or to adequately finance their own offense. Your gift will be used for the following: Administrative and operating . . . expenses . . . 15%, Private Member Law Suit . . . 25%, legal offense fund for TIGC . . . 25%, and investments . . . 35%. If the average gift is $100.00, FAM would have about $175,000 to fund a TIGC Member Suit, $175,000 to help TIGC with their legal costs, and $245,000 for investment purposes over a period of time.

Supp. App. 145-46.


Securities and Exchange Commission v. The Infinity Group Company Filed May 4, 2000 UNITED STATES COURT OF APPEALSFOR THE THIRD CIRCUIT Nos. 98-1215, 98-1216, 98-1217 UNITED STATES SECURITIES ANDEXCHANGE COMMISSION, v. THE INFINITY GROUP COMPANY; GEOFFREY P.BENSON; GEOFFREY J. O’CONNOR; FUTURES HOLDINGCOMPANY; SLB CHARITABLE TRUST; SUSAN L.BENSON; JGS TRUST; LINDSEY SPRINGER;BONDAGE BREAKER MINISTRIES LINDSEY SPRINGER; BONDAGE BREAKER MINISTRIES, THIRD-PARTY PLAINTIFFS v. THE UNION STATES OF THE CONSTITUTION, i.e.;ALASKA; ALABAMA; ARKANSAS; ARIZONA; CALIFORNIA;COLORADO; CONNECTICUT; DELAWARE; FLORIDA;GEORGIA; HAWAII; IOWA; ILLINOIS; INDIANA; KANSAS;KENTUCKY; LOUISIANA; MASSACHUSETTS; MARYLAND;MAINE; MICHIGAN; MINNESOTA; MISSOURI;MISSISSIPPI; MONTANA; NORTH CAROLINA; NORTHDAKOTA; NEBRASKA; NEW HAMPSHIRE; NEW JERSEY;NEW MEXICO; NEVADA; NEW YORK; OHIO; OKLAHOMA;OREGON; PENNSYLVANIA; RHODE ISLAND; SOUTHCAROLINA; SOUTH DAKOTA; TENNESSEE; TEXAS;UTAH; VIRGINIA; VERMONT; WISCONSIN; WESTVIRGINIA; WYOMING; WASHINGTON; FEDERAL DISTRICTOF COLUMBIA, THIRD-PARTY DEFENDANTS Geoffrey J. O’Connor (98-1215), Geoffrey P. Benson (98-1216), Susan L. Benson, Pro Se on behalf of herself in her representative capacity on behalf of SLB Charitable Trust, Futures Holding Company and JGS Trust (98-1217), Appellants ON APPEAL FROM THEUNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF PENNSYLVANIA Civil No.: 97-CV-05458 District Court Judge: Honorable Stewart Dalzell Argued: March 2, 1999 Before: ALITO and MCKEE, Circuit Judges, andSCHWARTZ, District Judge [FOOTNOTE *] (Filed: May 4, 2000) Richard L. Scheff, Esq. (Argued) Montgomery, McCraken, Walker & Rhoads, LLP 123 South Broad Street Philadelphia, PA 19109 Attorney for Appellants Harvey J. Goldschmid, Esq. Richard M. Humes, Esq. Samuel M. Forstein, Esq. Timothy N. McGarey, Esq. (Argued) Securities and Exchange Commission 450 Fifth Street, N.W., Stop 2-7 Washington, DC 20549 Attorney for Appellee United States Securities and Exchange Commission J. Bradford McIlvain, Esq. Dilworth, Paxson, Kalish & Kauffman 1735 Market Street 3200 The Mellon Bank Center Philadelphia, PA 19103 Attorney for Appellee Robert F. Sanville Mr. Lindsey K. Springer, Pro Se (Argued) 5147 South Harvard Suite 116 Tulsa, OK 74135
 
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