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`SECURITIES AND EXCHANGE COMMISSION,
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`17-cv-02088-RMB-KNF
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`MEMORANDUM OF LAW IN
`SUPPORT OF MOTION TO
`MODIFY SCHEDULING ORDER
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`ECF CASE
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`Plaintiff,
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`Defendants.
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`- against -
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`AMIR WALDMAN, et al.,
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`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 1 of 16
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`Terry R. Miller
`millerte@sec.gov
`Stephen C. McKenna
`mckennas@sec.gov
`SECURITIES AND EXCHANGE COMMISSION
`1961 Stout Street, 17th Floor
`Denver, Colorado 80294
`(303) 844-1000
`
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`Plaintiff Securities and Exchange Commission (the “Commission”), submits this
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`memorandum of law in support of its motion pursuant to Federal Rule of Civil Procedure
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`16(b)(4) to modify the scheduling order to permit remaining discovery abroad that has been
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`stayed by the Jerusalem District Court.
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`The Commission requests a limited exception to the discovery deadline to permit
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`completion of evidence gathering in Israel previously authorized by the Court in a Letter of
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`Request and Addendum (together, “Letter of Request”) pursuant to the Hague Convention on the
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`Take of Evidence Abroad in Civil or Commercial Matters (“Hague Convention”). Doc. Nos. 57
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`& 103. The Commission obtained some of the evidence sought pursuant to the Letter of Request,
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`but the Jerusalem District Court has stayed a portion of the discovery pending resolution of
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`appeals filed by Defendant James Shaoul and two other witnesses who have opposed the
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`evidence gathering process in Israel. The Commission requests that the exception have no impact
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`on the dispositive motion deadlines and proposes that the parties and the Court revisit the status
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`of the discovery remaining in Israel (“Remaining Discovery”), as necessary, after resolution of
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`dispositive motions.
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`Pursuant to Rule 1(E) of Individual Rules of Practice for Magistrate Judge Fox, (1) fact
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`and expert discovery would otherwise end on May 30, 2018 (Doc. No. 111); (2) the parties have
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`jointly requested one extension of the discovery cutoff: on March 23, 2018, the Parties submitted
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`a joint request to extend the discovery cutoff to May 30 (Doc. No. 110); (3) the Court granted the
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`parties previous request to extend the discovery cutoff (Doc. No. 111); and (4) Amir Waldman
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`and Roger Shaoul oppose the relief requested, Lawrence Cluff does not oppose the relief
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`requested, and James Shaoul has not responded to the Commission’s attempt to confer about this
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`motion. The reasons given by Dr. Waldman for the opposition is that he views the discovery cut-
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`off as a hard deadline and that the Commission has had enough time to conduct international
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`discovery. Roger Shaoul adopted the same reasons. Finally, the requested exception to the
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`discovery deadline will not affect any other scheduled deadlines. The Commission is confident it
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`can successfully oppose defendants’ motions for summary judgment without the Remaining
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`Discovery, and no trial date will be set until those motions are resolved.
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`ARGUMENT
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`“A schedule may be modified only for good cause and with the judge’s consent.” Fed. R.
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`Civ. P. 16(b)(4). “[A] finding of ‘good cause’ depends on the diligence of the moving
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`party.” McDonald v. Escape the Room Experience, LLC, No. 15CV7101 RA KNF, 2016 WL
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`6561408, at *1 (S.D.N.Y. Oct. 3, 2016) (quoting Parker v. Columbia Pictures Indus., 204 F.3d
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`326, 340 (2d Cir. 2000)). Diligence “is not, however, the only consideration,” and courts may
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`consider other relevant factors, including any prejudice. Id. (quoting Kassner v. 2nd Avenue
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`Delicatessen Inc., 496 F.3d 229, 244 (2d Cir. 2007)). Courts also consider “(1) the imminence of
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`trial; (2) whether the request is opposed; (3) prejudice to the non-moving party; (4) whether the
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`moving party foresaw the need for additional discovery, in light of the discovery deadline set by
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`the court; and (5) whether further discovery is likely to lead to relevant evidence.” Jeannite v.
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`City of New York Dep’t of Bldgs., No. 09 CIV. 3464 DAB KNF, 2010 WL 2542050, at *2
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`(S.D.N.Y. June 21, 2010) (citations omitted).
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`In this civil insider trading case, the Commission alleges that James Shaoul, who resides
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`in Israel, tipped his brother Roger Shaoul and his friend Dr. Waldman with material nonpublic
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`information about a tender offer for the purchase of Mobileye. Roger Shaoul tipped his friend,
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`Lawrence Cluff, and all defendants purchased Mobileye securities based on the material
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`nonpublic information. The Commission sought the deposition testimony for use at trial of James
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`Shaoul and four other witnesses in Israel pursuant to the Hague Convention. The Commission
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`scheduled the depositions of all five witnesses and obtained the deposition of two of these
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`witnesses in Israel prior to the close of discovery. However, the Jerusalem District Court has
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`stayed discovery as to James Shaoul, Ziv Sheleg (a financial adviser to Amir Waldman and
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`James Shaoul), and Yossi Azarzar (a mutual friend of James Shaoul and Mobileye insiders, who
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`made trades similar to Amir Waldman and Roger Shaoul)—specifically, the Remaining
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`Discovery includes requests for documents and depositions from the three witnesses.
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`As described below, the Commission acted diligently in pursuing the Remaining
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`Discovery, and the other relevant factors weigh in favor of an exception to the discovery
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`deadline for the Remaining Discovery.
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`I.
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`THE COMMISSION PURSUED DISCOVERY IN ISRAEL WITH DILIGENCE.
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`The Commission initiated the Hague Convention process with diligence by filing the
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`Letter of Request shortly after Amir Waldman’s deposition, which he had delayed until
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`November 8, 2017. The Commission then diligently worked with the Israeli authorities, and even
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`hired an attorney in Israel to facilitate the evidence gathering process. The Remaining Discovery
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`is not yet complete due to reasons outside of the Commission’s control, which is evidenced
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`primarily by the fact that the Commission was able to obtain documents and testimony located in
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`Israel prior to the discovery deadline from two of the five witnesses from whom such discovery
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`was sought.
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`A.
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`The Commission diligently filed the Letter of Request.
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`The Commission aggressively sought discovery since the dates these consolidated cases
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`were filed. The case against Amir Waldman was filed on March 23, 2017, the same day that the
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`Court granted the Commission’s request for expedited discovery. Doc. Nos. 1 & 5. The
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`Commission served written discovery requests on Dr. Waldman on March 23, and his responses
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`were due on March 28. The Commission also requested Dr. Waldman’s deposition in New York
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`prior to April 5, 2017, which was the date scheduled for a show cause hearing. Doc. No. 5 at 3.
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`Dr. Waldman requested, and the Commission agreed, to (1) extend the show cause hearing many
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`months (it occurred in April 2018); (2) extend the deadline to respond to written discovery until
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`June 30, 2017; and (3) schedule Dr. Waldman’s deposition after he responded to written
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`discovery (it occurred many months later in Toronto, Canada). Declaration of Terry R. Miller
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`¶ 2, attached hereto as Exhibit A (“Miller Decl.”).
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`Dr. Waldman first responded to written discovery requests and made his initial
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`disclosures on June 30, 2017. In the written disclosures and documents produced on June 30, the
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`Commission learned the identity and relevance of Ziv Sheleg and Moshe Ruach for the first time.
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`It also learned for the first time from these materials that James Shaoul communicated with
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`Dr. Waldman about Mobileye during the relevant trading period. Miller Decl. ¶ 3.
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`The Commission began seeking evidence in Israel as early as July 19, 2017, by
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`conferring with counsel of record. On July 19, the Commission asked the parties to set aside the
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`week of October 9, 2017, for depositions in Israel. Email dated July 19, 2017, attached hereto as
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`Exhibit B. On August 4, the Commission circulated a draft letter of request to Dr. Waldman’s
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`counsel, which requested depositions in Israel of four witnesses: Dr. Waldman, James Shaoul,
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`Ziv Sheleg, and Moshe Ruach. Email dated August 4, 2017, attached hereto as Exhibit C. On
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`August 14, counsel for the Commission conferred with the parties again, noting that it hoped to
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`submit the letter of request “today or tomorrow. We need to file as soon as possible to give the
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`Israeli Authority sufficient time to process the request by October.” Email dated August 14,
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`2017, attached hereto as Exhibit D. Dr. Waldman responded that he did not want to be listed on
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`the letter of request because he did not want to draw the attention of the Israeli authorities, and
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`did not want to appear in the United States for a deposition because he feared arrest. Miller Decl.
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`¶ 4. The Commission’s purpose has never been to use this action for other purposes and, on
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`August 31, 2017, the Commission agreed to meet in Toronto for Dr. Waldman’s deposition on
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`November 8 to accommodate Dr. Waldman’s concerns. Email dated August 31, 2017, attached
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`hereto as Exhibit E.
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`On September 8, just eight days after the Commission agreed to remove Dr. Waldman
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`from the Letter of Request, the Commission circulated a proposed case management plan in
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`advance of a Court conference where the Commission proposed an extension of the fact
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`discovery cutoff to allow for discovery taken pursuant to the Hague Convention, and explained
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`that the “process has proven to be lengthy, but the SEC thinks that a carve-out of the agreed upon
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`deadline makes more sense than an extension of all fact discovery.” Email dated September 8,
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`2017, attached hereto as Exhibit F. The parties agreed that the discovery cutoff should not apply
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`to discovery occurring in Israel and submitted the proposal to the Court on September 11.
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`Doc. No. 50.
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`On September 12 and 14, the parties deposed Mobileye pursuant to Rule 30(b)(6) and
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`two Mobileye directors. Miller Decl. ¶ 5. From these depositions, the Commission learned
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`additional significance of a group of friends that includes the two Mobileye directors, James
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`Shaoul, Doron Sagie and Yossi Azarzar. Miller Decl. ¶ 5. On September 13, James Shaoul
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`became a defendant. SEC v. Cluff, et al., Doc. No. 48.
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`Because the parties had agreed that the discovery cutoff would not apply to depositions in
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`Israel and because Dr. Waldman’s deposition was scheduled for November 8 but not certain to
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`occur (the Commission had been trying to depose Dr. Waldman since March 2017), the
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`Commission waited to submit the Letter of Request until after November 8, when the
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`Commission would learn at least the following: (1) whether the Commission would need the
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`assistance of Israel courts to compel attendance of Dr. Waldman at his own deposition; and
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`(2) additional information that might obviate the need for depositions of some witnesses or
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`reveal the need for depositions of other witnesses in Israel. It was prudent to wait for this
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`information, especially in light of the parties’ agreement that the discovery cutoff would not
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`apply to discovery in Israel and the fact that cost and time constraints counseled against more
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`than one trip to Israel.
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`The Commission submitted the Letter of Request for the Court’s approval one week after
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`Dr. Waldman’s deposition (Doc. No. 55), which took place on November 8, 2017—more than
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`six months after the Commission initially asked to take Dr. Waldman’s deposition. Counsel for
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`the Commission does not dispute that Dr. Waldman made his many requests for additional time
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`to respond to discovery and appear at a deposition in good faith. Importantly, neither Dr.
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`Waldman nor Roger Shaoul filed an opposition to the Letter of Request at the time the
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`Commission made its submission.
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`In sum, the Commission pursued discovery since the day it filed this action in March
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`2017, but Dr. Waldman sought and obtained many extensions of time for discovery. The
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`Commission began seeking discovery in Israel just weeks after Dr. Waldman responded to
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`written discovery, but the Commission agreed to meet him in Toronto rather than submit a Letter
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`of Request for his deposition in Israel. The Commission submitted the Letter of Request after his
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`deposition to ensure that all necessary witnesses were listed and that there would be a need for
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`only one trip. There was no unreasonable delay, but even if there were, equity should not permit
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`Dr. Waldman to argue that the Commission failed to act diligently because it accommodated his
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`requests.
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`B.
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`The Commission Diligently Sought Discovery Pursuant to the Letter of
`Request.
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`In the Letter of Request, the Commission sought the collection of documents and the
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`deposition testimony of five witnesses who reside in Israel, including James Shaoul. The
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`following summarizes the efforts made to obtain the Remaining Discovery and the activity
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`leading to the stay orders issued by the Jerusalem District Court:
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`• On January 21, 2018, The Israeli authorities responded to the Commission’s
`request for appointment of a private attorney to assist with the case by asking for
`an official confirmation for the appointment of a private attorney to assist with the
`case. Doc. No. 99-1.1 Among other things, the appointment of a private attorney
`would help the Israeli courts complete discovery more quickly.
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`1 The authorities also asked for the addresses of two witnesses who were listed on Dr. Waldman’s initial disclosures.
`Dr. Waldman did not disclose their addresses.
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`• On January 25, the Commission submitted a proposed addendum to the Letter of
`Request that included a request for the appointment of Eric Sherby to assist the
`Israeli courts in summoning witnesses and scheduling depositions. Doc. No. 103;
`see Transcript of Feb. 7, 2018 Conference at 17-19, attached hereto as Exhibit G.
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`• Dr. Waldman objected to the request for the addendum, admittedly without a legal
`basis to oppose the request. Ex. G at 20. Judge Berman executed the Addendum
`on February 7. Doc. No. 103.
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`• James Shaoul was served on January 29. SEC v. Cluff, et al., Doc. No. 89. On
`January 31, the Commission emailed Asaf Biger for help obtaining discovery
`from his client, James Shaoul. Email dated January 31, 2018, attached hereto as
`Exhibit H. Prior to September 13, 2017, counsel for Roger Shaoul provided the
`contact information for Asaf Biger and represented to the Commission that Asaf
`Biger was James Shaoul’s counsel. Declaration of Terry R. Miller for submission
`to the Israeli Magistrates Court ¶ 9, attached hereto as Exhibit I; see also Miller
`Decl. at ¶ 9(h).
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`• Since September 13, Mr. Biger had been in periodic communication with counsel
`for the Commission and counsel for Roger Shaoul, including by email, Ex. I ¶¶ 9-
`14, a personal appearance at the deposition of Amir Waldman, Ex. I ¶ 12, and the
`depositions of Doron Sagie and Moshe Ruach. Miller Decl. ¶ 6.
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`• On February 14, 2018, the Commission served James Shaoul personally (with a
`copy to his Israeli counsel, Asaf Biger) with written discovery requests and a
`notice of his deposition scheduled for March 23. Email dated February 14, 2018,
`attached hereto as Exhibit J.
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`• James Shaoul did not respond to the February 14 written discovery requests and
`failed to appear at his March 23 deposition. Miller Decl. ¶ 7.
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`• On or about February 11, the Directorate of Courts (the “DOC”), which serves as
`Israel’s Central Authority under the Hague Evidence Convention, approved this
`Court’s Letter of Request and sent the Letter of Request to the Magistrates Court.
`See Declaration of Eric Sherby ¶ 3(a) attached hereto as Exhibit K (“Sherby
`Decl.”).
`• On Feb. 20, the Magistrates Court issued an order (the “February Order”),
`appointing Eric Sherby to oversee the evidence-gathering process. Mr. Sherby’s
`office received the February Order on Feb. 22, and that same day, copies of that
`Order and the Letter of Request were sent to each of the five Israeli witnesses to
`schedule discovery deadlines and deposition dates. Sherby Decl. ¶ 3(b).
`• Having received no response from witnesses Yossi Azarzar, Ziv Sheleg, and
`James Shaoul, Mr. Sherby sent follow-up letters to each of them (to Shaoul,
`through his Israeli attorney, Mr. Biger). Sherby Decl. ¶ 3(d).
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`• Eventually Mr. Azarzar informed Mr. Sherby (through counsel) that he would,
`subject to certain conditions, produce documents and attend a deposition.
`However Mr. Azarzar apparently changed his mind after learning that two other
`witnesses intended to file motions to cancel the February Order. Sherby Decl.
`¶ 3(e).
`• Mr. Sherby sent a second follow-up letter to Mr. Sheleg. On the eve of the
`expiration of the thirty-day deadline for moving to cancel, counsel for Mr. Sheleg
`contacted Mr. Sherby to request an extension of that deadline. Mr. Sherby agreed
`to the requested extension. Sherby Decl. ¶ 3(f).
`• Eventually Mr. Sheleg filed a Motion to cancel (entitled “motion to dismiss”).
`Mr. Azarzar joined that motion. Sherby Decl. ¶ 3(g).
`• James Shaoul filed a separate motion to cancel the February Order. His motion
`was filed on the last business day before the expiration of his deadline. In support
`of his motion, James Shaoul filed a declaration (in Hebrew) in which he asserted
`(inter alia) that it would take him hundreds of hours to comply with this Court’s
`Request for documents. Sherby Decl. ¶ 3(h).
`• James Shaoul’s motion dated March 25, filed just two days after he failed to
`appear at a deposition noticed under the Federal Rules of Civil Procedure, is 27
`pages long and attaches an order from this Court and a declaration signed by
`James Shaoul. March 25 Motion, attached as Exhibit L, see also Miller Decl. ¶ 8.
`This motion shows that James Shaoul is familiar with this case and, rather than
`just passively ignoring his discovery obligations as a party, he is vigorously
`opposing requests to provide evidence in this case.
`• Counsel for the Commission prepared Exhibit I, a lengthy declaration with
`exhibits on April 6, 2018. That declaration explains the efforts Commission
`counsel undertook to involve James Shaoul in the Hague Convention process
`Ex. I ¶¶ 6-19, the obstreperous arguments James Shaoul made to the Magistrates
`Court to avoid giving evidence, Ex. I ¶¶ 20-33 and further the diligence of the
`Commission to obtain evidence within the discovery window, see, e.g., Ex. I ¶¶ 5,
`32-33.
`• On April 12, the Magistrates Court denied the motion filed by Mr. Sheleg and
`denied the motion filed by James Shaoul. Sherby Decl. ¶ 3(i)-(j).
`• On April 20, Mr. Sherby filed a motion to compel production. On April 24, the
`Magistrate Court granted the motion to compel. Sherby Decl. ¶ 3(k)-(l).
`• Shortly before their scheduled depositions, James Shaoul and Mr. Sheleg filed
`separate appeals in the Jerusalem District Court challenging the Magistrates
`Court’s rulings (the February Order and the order to compel production). James
`Shaoul and Mr. Azarzar joined in Ziv Sheleg’s appeal. Sherby Decl. ¶ 3(m).
`• On April 29, the Jerusalem District Court granted a request for stay of the
`evidence-taking as to Ziv Sheleg and Yossi Azarzar, pending resolution of their
`appeal. Sherby Decl. ¶ 3(n).
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`• On May 1, counsel for the Commission reported to Magistrate Judge Fox during a
`status conference that the Commission was hopeful that discovery would be
`complete by the May 30 deadline.
`• On May 2, Doron Sagie appeared for a deposition in Tel Aviv, Israel. He had
`previously disclosed documents requested by the Commission. Miller Decl. ¶ 6.
`• On May 2, the Jerusalem District Court issued an order staying the evidence-
`taking as to James Shaoul, pending resolution of his appeal. In staying the
`evidence-taking as to the three appellants/witnesses, the Jerusalem District Court
`required that they post security equivalent to approximately $7,200, which is an
`amount (presumably) sufficient to cover travel costs of the Commission for a
`return trip to Israel. Sherby Decl. ¶ 3(o)-(p). The Jerusalem District Court did not
`suggest that the appellants had a likelihood of success, but noted that absent a stay
`the appeals would become moot if the parties conducted the scheduled depositions
`Sherby Decl. ¶ 4.
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`• On May 6, James Shaoul failed to appear in Tel Aviv for a deposition noticed
`under Fed. R. Civ. P. 30. Certificate of Nonappearance of James Shaoul, attached
`hereto as Exhibit M and Notice of Deposition attached as Exhibit N. Although
`one effect of the stay orders issued by the Jerusalem District Court was that Israeli
`law did not compel the attendance of James Shaoul at the deposition, Rule 30 was
`sufficient to compel his attendance under the power of this Court because he is a
`party to this action. Societe Nationale Industrielle Aerospatiale v. U.S. Dist.
`Court, 482 U.S. 522, 539-540 (1987) (neither the Hague Convention nor foreign
`law deprives the Court of jurisdiction it otherwise possesses of a foreign national
`party).
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`• On May 6, Moshe Ruach appeared for a deposition in Tel Aviv. He had
`previously disclosed documents requested by the Commission. Miller Decl. ¶ 6.
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`The activity described above shows that, since filing the Letter of Request, the
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`Commission diligently pursued discovery in Israel and, at considerable cost, promptly responded
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`to the vigorous efforts of James Shaoul, Mr. Sheleg, and Mr. Azarzar to avoid providing
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`evidence in this matter. The Commission paid for a private attorney to promptly advance the
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`evidence gathering, and the Commission and Mr. Sherby remained in repeated contact with the
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`authorities in Israel. The Commission has made numerous attempts to obtain discovery and
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`depositions from James Shaoul as a defendant in this action, but he has failed to respond. The
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`Commission obtained valuable evidence in Israel pursuant to the Letter of Request. The final
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`obstacle to obtaining the Remaining Discovery – the stay orders issued by the Jerusalem District
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`Court – did not result from delay by the Commission and, in any event, would have posed the
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`same problem regardless of when the Commission submitted the Letter of Request.
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`C.
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`The Commission’s diligence weighs in favor of an exception for the Hague
`Depositions.
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`As evidenced by the discovery it did obtain in Israel on May 2 and May 6, Miller Decl.
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`¶ 6, among the other reasons above, the Commission acted with diligence to obtain discovery
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`pursuant to the Letter of Request prior to May 30. However, for reasons outside of its control the
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`Commission was unable to obtain all of the evidence it sought in the Letter of Request. Courts
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`will find good cause under the diligence standard when the completion of discovery abroad
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`cannot be completed for reasons outside of a litigant’s control, for instance where delay results
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`from actions of foreign authorities when processing a request for assistance. In re Cathode Ray
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`Tube (CRT) Antitrust Litig., 2014 WL 4954634, *3-4 (N.D. Cal. 2014) (“[T]he AG’s office has
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`been in frequent communication with Dutch authorities seeking a resolution of these issues, even
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`going so far as to hire a Dutch agent to seek a resolution of this issue, but has so far been
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`thwarted by misfiled documents, conflicts of interest, and other administrative issues outside the
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`AG’s control.”). The same result is appropriate when a request for extension of the discovery
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`deadline is analyzed under the “recently amended Rules 1 and 26 of the Federal Rules of Civil
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`Procedure.” City of Almaty, Kazahkstan v. Ablyazov, No. 15CV05345-AJN-KHP, 2018 WL
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`2148430, at *1, *3 (S.D.N.Y. May 10, 2018) (“Factor 3 also weighs in favor of extending the
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`discovery deadline. Plaintiffs (and Defendants) faced certain unavoidable obstacles in obtaining
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`discovery because of the complexity of the case, the quantity of non-party discovery and the fact
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`that a number of witnesses and the three individual Defendants are located outside of the United
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`States in jurisdictions that require compliance with Hague Convention procedures.”). More
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`generally, where, as here, a party attempts to schedule depositions well before the close of
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`discovery but cannot complete the deposition prior to the deadline, courts find good cause to
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`extend discovery for purposes of the noticed deposition. E.g. Carlson v. Geneva City Sch. Dist.,
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`277 F.R.D. 90, 95 (W.D.N.Y. 2011).
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`The Commission has obtained discovery in Israel from some witnesses prior to the
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`discovery deadline but, despite its diligence, the Commission will not be allowed to complete the
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`discovery before the discovery deadline without a modification. Accordingly, good cause exists
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`for the limited exception requested by the Commission.
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`II.
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`
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`OTHER RELEVANT FACTORS WEIGH IN FAVOR OF A LIMITED
`EXCEPTION.
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`The other factors considered by courts when determining whether to extend discovery all
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`weigh in favor a limited exception for the Remaining Discovery.
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`Imminence of Trial. Trial is not imminent. There is no pretrial conference scheduled, and
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`the requested exception will not interfere with resolution of dispositive motions.
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`Whether the Request is Opposed. The defendants who oppose the exception for the
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`Remaining Discovery, Dr. Waldman and Roger Shaoul, indicated that they will file dispositive
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`motions, which will push back trial even further. This factor does not weigh heavily against the
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`requested exception.
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`Prejudice to the Defendants. The requested exception will not prejudice the defendants
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`because it will not interfere with any scheduled deadlines or the unscheduled dispositive motion
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`briefing and will not bar any of the parties from raising specific claims of prejudice once the
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`witnesses become available in Israel. In light of the prejudice to the Commission and the truth-
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`seeking function of discovery generally, this factor weighs in favor of the requested exception.
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`Whether the Commission foresaw the need for additional discovery, in light of
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`the discovery deadline set by the court. The Commission foresaw the need for the Remaining
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`Discovery and acted diligently, as described above. The Commission was able to obtain
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`discovery in Israel pursuant to the Letter of Request prior to the discovery deadline. However, it
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`did not foresee the order by the Jerusalem District Court staying the Remaining Discovery. In the
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`appeal by Mr. Sheleg joined by James Shaoul and Mr. Azarzar, the witnesses asserted one
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`primary argument that, if successful, would prevent the evidence gathering under the Letter of
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`Request entirely (as opposed to arguments to limit the scope of evidence gathering). Sherby
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`Decl. ¶ 5. They argued that this case is not a civil or commercial matter and, therefore, the Israeli
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`Magistrates Court should not offer the assistance requested by this Court under the Hague
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`Evidence Convention and approved by the Israel Central Authority. Id. The Commission
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`believes that this Court, the Israeli Central Authority, and the Magistrates Court in Jerusalem
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`were all correct that use of the Hague Convention in this civil matter is proper, which is
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`consistent with the Commission’s prior practice in Israel in successfully obtaining assistance in
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`evidence gathering pursuant to the Hague Evidence Convention. See Sherby Decl. ¶ 6.
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`Accordingly, the basis for the stay orders was not reasonably foreseeable based on the
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`Commission’s understanding of a civil action and based on its prior practice in Israel.
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`Whether further discovery is likely to lead to relevant evidence. The need for relevant
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`evidence weighs heavily in favor of an exception. See United States v. Nixon, 418 U.S. 683, 709
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`(1974) (“The need to develop all relevant facts in the adversary system is both fundamental and
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`comprehensive.”). The testimony of James Shaoul goes to the heart of this case. James Shaoul is
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`an upstream tipper of the other defendants. Dr. Waldman and Roger Shaoul both argued many
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`times in this case that the Commission lacks evidence that James Shaoul obtained material
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`nonpublic information in an improper manner. This is likely to be a key issue at trial because
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`evidence of suspicious trading is overwhelming. The deposition of James Shaoul in Israel also is
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`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 14 of 16
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`necessary because, despite being a party to this case, James Shaoul has given every indication
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`that he will not appear at trial. While he has retained counsel in Israel and vigorously opposed
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`the Letter of Request in the Israeli court system, he has ignored all deadlines and discovery
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`obligations imposed by this Court. If the jury in this matter is going to hear testimony from a
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`central figure in this case, it will only be through a deposition conducted in Israel pursuant to the
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`Letter of Request.
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`Ziv Sheleg is a financial advisor to Amir Waldman and James Shaoul who offered them
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`advice about Mobileye stock while they possessed and traded on material nonpublic information.
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`Evidence from Mr. Sheleg will help confirm or refute Dr. Waldman’s explanation for his trading.
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`Yossi Azarzar is a mutual friend of James Shaoul and Mobileye insiders who made unusual and
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`remarkably timed purchases of Mobileye securities at the same time as Dr. Waldman and Roger
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`Shaoul but, unlike Dr. Waldman, was able to transfer the profits of his trading outside of the
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`Court’s jurisdiction before the trading was detected. Evidence from Mr. Azarzar will help
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`confirm or refute the evidence that James Shaoul possessed material nonpublic information about
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`the tender offer.
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`Counsel for the Commission has conferred with counsel for James Shaoul, Mr. Sheleg,
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`and Mr. Azarzar, and asked each of them to voluntarily provide evidence. All have declined, and
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`all indications are that none of these individuals will come to the United States to provide
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`evidence at trial. The jury is entitled to hear evidence from these witnesses—especially James
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`Shaoul—and discovery authorized by this Court in the Letter of Request is the only mechanism
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`available to compel evidence from these reluctant witnesses.
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`One last factor weighs heavily in favor of an exception to the discovery cutoff for the
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`Remaining Discovery. The Hague Convention is an international treaty that promotes the spirit
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`Case 1:17-cv-02460-RMB-KNF Document 95 Filed 05/25/18 Page 15 of 16
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`of comity among its member states. The Israeli courts have worked diligently to address the
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`vigorous efforts of James Shaoul to avoid discovery and have stayed his deposition. They did not
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`cancel the ordered discovery. The upshot of the stay orders is that the Jerusalem District Court
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`determined that it is best to consider the appeal in due course and not on an expedited basis.
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`Denying the exception for Remaining Discovery will moot the orderly review contemplated by
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`the Jerusalem District Court. On the other hand, comity and respect for the Jerusalem District
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`Court will be served by an exception for the Remaining Discovery.
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`CONCLUSION
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`For the reasons above, the Commission requests that the Court enter an order (1) granting
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`an exception to the discovery deadline for the Remaining Discovery in Israel, and (2) directing
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`the parties to address the status of the Remaining Discovery after resolution of dispositive
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`motions.
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`Dated: May 25, 2018
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