Case 4:15-cv-00338-ALM Document 184 Filed 08/25/16 Page 1 of 5 PageID #: 3097
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`United States District Court
`EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`Case No. 4:15-CV-338
`Judge Mazzant
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` §
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`§§
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`§
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`§
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`SECURITIES AND EXCHANGE
`COMMISSION
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`v.
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`SETHI PETROLEUM, LLC and
`SAMEER P. SETHI
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`MEMORANDUM OPINION AND ORDER
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`On August 9, 2016, the Court entered an order holding Sameer P. Sethi (“Sameer”), Praveen
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`Sethi (“Praveen”), and John Weber (“Weber”) (collectively, “Contemnors”) in contempt of its
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`Agreed Order Granting Preliminary Injunction, Asset Freeze, and Other Relief (Dkt. #23) (the
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`“Preliminary Injunction”) (Dkt. 169, the “Contempt Order”). The Court further ordered Sameer,
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`Praveen, and Weber to (1) cease and desist from the offer and sale of any securities; (2) cease and
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`desist Cambrian Resources LLC’s (“Cambrian”) operations, providing sworn declarations describing
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`the steps undertaken to do so; (3) provide a sworn accounting for all Cambrian assets; (4) return a
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`total of $77,500 to Cambrian’s two known investors and confirm that there were no other investors;
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`and (5) pay the Commission’s costs incurred in the contempt proceeding. (Contempt Order, pp.
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`29-30).1 The Court further ordered the Commission to notify the Court if the Contemnors failed to
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`comply with the Court’s order within 14 days, such period expiring on August 23, 2016.
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`1 The Commissioner correctly points out that the requirement that Contemnors pay the
`Commission’s costs is not triggered until the Court approves the Commission’s bill of costs,
`which has not been submitted by the Commission.
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`Case 4:15-cv-00338-ALM Document 184 Filed 08/25/16 Page 2 of 5 PageID #: 3098
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`On August 20, 2016, Sameer filed a motion asking the Court for sixty (60) more days to
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`comply with the Contempt Order and “an additional 21 days” to file a motion to reconsider the
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`Contempt Order (Dkt. #176). On August 22, 2016, Praveen filed an opposed motion asking for “at
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`least 60 days” to provide a sworn declaration describing steps undertaken to cease and desist the sale
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`of securities, provide a sworn accounting of Cambrian’s assets, and return investors’ money (Dkt.
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`#178). On August 23, 2016, Weber filed an emergency motion asking for sixty (60) additional days
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`to repay Cambrian investors and stating that he is otherwise in compliance with the Contempt Order
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`(Dkt. #182). On August 23, 2016, Sameer filed documents attempting to demonstrate compliance
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`with the Contempt Order (Dkt. #180) and a Notice of Appeal of the Contempt Order (Dkt. #181).
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`On August 24, 2016, the Commission filed a response to the various motions (Dkt. #183).
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`Praveen
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`The Commission asserts that Praveen’s motion and attached exhibits are puzzling and
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`troubling. The Court agrees. Praveen submits nine partial account statements in support of the
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`proposition that he cannot pay. Praveen’s partial account statements completely fail to support the
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`proposition that he should be given more time to comply with the Court’s order.
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`The Commission summarizes the various documents submitted by Praveen, and the Court
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`adopts those herein:
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`Praveen’s July 6, 2016 Legacy Bank statement shows a deposit of $298,690 on June 29, 2016
`which is seven days after the Commission filed its Show Cause motion against the
`Contemnors (Dkt. #178-2). On the same day, Praveen withdrew $278,690 from the same
`account, apparently in the form of a cashier’s check to Bina Beechum. Praveen provides
`neither a description of these transactions nor an explanation for how this material supports
`the idea that he cannot repay Cambrian’s investors. The Commission’s counsel contacted
`Bina Beechum on August 23, 2016, and discovered that she is Praveen’s daughter and
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`Case 4:15-cv-00338-ALM Document 184 Filed 08/25/16 Page 3 of 5 PageID #: 3099
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`Sameer’s sister. She informed counsel that the $278,690 was a personal loan from her father.
`She said that she asked her father for the loan, received the check in mid or late July, and that
`she planned on using the money in connection with a real estate auction in August. Bina
`Beechum represented that she still has the cashier’s check in her possession.
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`Praveen states that his monthly income is $9,200 (Dkt. #178-1). Although he does not
`indicate the source of this income, his stated $250 monthly landscaping expense seems to
`reflect the maintenance of income property. Other exhibits show Praveen making monthly
`credit card payments and bank account withdrawals and deposits exceeding his stated
`monthly income.
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`Praveen’s monthly budget includes the statement that “Praveen’s checking, savings, assets,
`etc. are frozen.” The partial bank statements contradict this statement, with numerous
`transactions in June and July 2016.
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`Aside from the $298,690 transfer in and $278,690 transfer to his daughter, Praveen’s July
`6, 2016 Legacy Bank account statement shows additional deposits of $15,759. The total
`deposits on that statement (over $50,000) exceeds Praveen’s stated monthly income of
`$9,200.
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`Praveen’s next account statement, for the period ending August 6, 2016, is again presented
`only in partial form, with transactions missing from July 28 through August 6, 2016, which
`are dates during the pendency of the contempt action (Dkt. #178-3). During this one month,
`Praveen made withdrawals from this account in excess of $68,000.
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`Praveen attaches a partial Citibank credit card statement from the period ending July 22,
`2016 (Dkt. #178-4). This statement shows (1) two payments totaling $9,483.62 (made 7 days
`apart, one in June, one in July) exceeding his entire monthly stated income; (2) credit card
`charges ($8,324.52) approaching his entire monthly budget; and (3) travel to and expenses
`paid in Ireland during the pendency of the contempt motion.
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`Praveen’s Citibank card statement for the period ending July 7, 2016, which appears to be
`a different credit card account, shows that Praveen made three payments between June 14
`and July 6, 2016, totaling more than $28,000 (Dkt. #178-6).
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`The same statement shows that Praveen made two payments of $308.10 and one payment of
`$616.20 to the Office of the Texas Secretary of State. While the Commission has not been
`able to determine whether Praveen has registered new entities, it appears to cost $308.10 to
`register an LLC in the state of Texas.
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`The same statement shows travel expenses to Italy for Praveen, his wife, Sameer, Julissa
`Martinez, and two others including Sameer’s son, who apparently flew to Rome from
`Greece. The statement shows only return-trip tickets, and the trip appears to have happened
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`Case 4:15-cv-00338-ALM Document 184 Filed 08/25/16 Page 4 of 5 PageID #: 3100
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`a week before the contempt hearing (Dkt. #178-6).
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`In his closing brief, Praveen claimed that Cambrian’s remaining cash, which amounted to
`more than $40,000, had been used by Cambrian for “moving expenses.” (Dkt. 163, p. 8 n.3).
`Praveen now claims, without supporting evidence, that he simply returned the money to
`Cambrian. (Dkt. 178, p. 2 n.2). Praveen ignored the Commission’s request for any
`substantiation about his moving-expenses claim.
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`The Commission argues that Praveen’s motion and exhibits comprise a far more damning
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`array of facts concerning his involvement and willingness to circumvent the Court’s order than the
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`Commission previously suspected. The Court agrees. It strains credibility to think that Praveen took
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`the $44,000 to $49,000 paid to him in cash, representing investors’ money, and used it all for moving
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`expenses. Notably absent are any records to demonstrate that. Praveen’s testimony at the contempt
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`hearing strained credibility and the Court found that Praveen knew about the injunction and
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`intentionally attempted to circumvent the order. Even more troubling, and possibly to dissipate
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`assets to avoid paying future contempt order, Praveen transferred to his daughter $278,690 after
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`being put on notice that the Commission was seeking contempt. Praveen could have given an
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`explanation for these matters, but failed to do so, and the Commission is correct that every document
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`provided by Praveen raises more questions than answers. Praveen has offered no plausible reason
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`for his request for an extension of time and no reasonable excuse for his current noncompliance with
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`the Court’s Contempt Order. The Court denies Praveen’s request for an extension and finds that he
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`is not in compliance with the Court’s Contempt Order.
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`It is therefore ORDERED that Praveen shall be imprisoned until he chooses to repay
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`Cambrian’s investors and comply with the other provisions of the Court’s Contempt Order. Praveen
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`shall turn himself in to the U.S. Marshal’s Service, U. S. Courthouse Annex, 200 N. Travis Street,
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`Mezzanine Level, Sherman, Texas, no later than 2:00 p.m. on August 26, 2016. If Praveen fails to
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`Case 4:15-cv-00338-ALM Document 184 Filed 08/25/16 Page 5 of 5 PageID #: 3101
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`appear by the required time, the Court will issue a warrant for his arrest.
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`It further ORDERED that Praveen shall be fined $500 each day until he chooses to comply
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`with the Contempt Order. The Court also orders Praveen to place an additional sum of $50,000 into
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`escrow with the Receiver to cover the Commission’s potential costs in litigating this matter. Praveen
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`has fourteen (14) days to submit the $50,000 to be held in escrow.
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`It is further ORDERED that Praveen Sethi’s Emergency Motion for Leave to Obtain
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`Additional Time to Comply with the Court’s Memorandum Opinion and Order on Plaintiff’s
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`Emergency Motion for Show Cause Hearing to Hold Defendant and Others in Contempt is hereby
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`DENIED.
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`It is further ORDERED that Defendant Sameer P. Sethi’s Motion: 1:) to Extend Time to
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`Comply with the Court’s Order of Contempt Dated August 9, 2016 (Doc. 169) and: 2) for an
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`Extension to File a Motion to Reconsider the Court’s Ruling (Dkt. #176) is hereby GRANTED in
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`part, and Defendant is granted an additional fourteen (14) days to fully comply with the Court’s
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`Contempt Order. All other relief is DENIED. The SEC shall notify the Court if Sameer complies
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`or fails to comply with the Court’s order.
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