The opinion of the court was delivered by: Hayes, Judge:
The matter before the Court is the Motion for an Order of Preliminary Injunction filed by Plaintiff United States Commodity Futures Trading Commission. (ECF No. 14).
On July 27, 2011, Plaintiff Commodity Futures Trading Commission ("CFTC") filed a Complaint for Injunctive and Other Equitable Relief and Penalties under the Commodity Exchange Act against defendants Douglas Elsworth Wilson ("Wilson"), Elsworth Berg Capital Management LLC ("EBCM"), Elsworth Berg Inc ("EBI") and Elsworth Berg FX ("EBFX"). (ECF No. 1). Plaintiff also filed an Application for Statutory Restraining Order, seeking injunctive relief pursuant to Section 6c(a) of the Commodity Exchange Act. (ECF No. 3).
On August 12, 2011, the parties filed a Joint Motion for an Order Entering a Consent Statutory Restraining Order. (ECF No. 12). On August 18, 2011, the Court entered the Consent Statutory Restraining Order prohibiting the withdrawal, transfer, removal, dissipation, concealment, or disposition of Defendants' assets. (ECF No. 13). The Consent Statutory Restraining Order allowed Defendant Wilson "to withdraw up to $6,000 per month" from a bank account held in his name "to pay for living expenses." Id. at 4.
On August 23, 2011, Plaintiff filed a Motion for Preliminary Injunction seeking an order enjoining Defendants from committing further violations of the Commodity Exchange Act. The preliminary injunction also sought to freeze Defendants' assets, require an accounting, prevent destruction of books and records, allow CFTC access to books and records, and prevent Defendants from participating in certain trading, registration, and activities regulated by the Commodity Exchange Act. (ECF No. 14).
On September 12, 2011, the parties filed a Joint Motion for Entry of Consent Order of Preliminary Injunction ("Consent Order"). (ECF No. 16). On September 13, 2011, the Court issued the Consent Order. (ECF No. 17). The Consent Order prohibits Defendants "or any other person from, directly or indirectly withdrawing, removing, assigning, transferring, pledging, encumbering, disbursing, dissipating, converting, selling or otherwise disposing of any such funds" held in the name of any Defendant. (ECF No. 17 at 6-7). The Consent Order did not resolve whether assets provided to attorneys Khoung Dan Tien and Todd C. Ringstad as a retainer for future legal services were excluded from the asset freeze. However, the Consent Order provides that "attorneys Tien and Ringstad agree not to and shall not withdraw, remove, or otherwise dispose of the retainer assets without leave of court." Id. at 7.
On September 27, 2011, Defendants filed an Opposition to Plaintiff's Motion for Preliminary Injunction regarding the retainer assets. (ECF No. 18). On October 7, 2011, Plaintiff filed a Reply. (ECF No. 21). Plaintiff also filed the supplemental declaration of Melissa Glasbrenner and exhibits 1 through 14 which included: attorney-client fee agreements; retainer checks and records of legal payments; a collateral liability calculation; cash activity summaries and bank account statements; the collateral reserve trust agreement; investigative testimony and results of the asset freeze; checking account deposit details; and brochures and letters regarding Defendant companies.
On December 2, 2011, the Court issued an Order stating: "Plaintiff U.S. Commodity Futures Trading Commission has submitted the supplemental declaration of Melissa M. Glasbrenner and exhibits 1-14 with its reply in support of the motion for preliminary injunction. Defendant may file a surreply by December 12, 2011." (ECF No. 23). To date, Defendants have failed to file a surreply.
II. Contentions of the Parties
Plaintiff contends that the retainer assets are "within the scope of the general freeze" which was granted by the Consent Order. (ECF No. 21 at 6). Plaintiff contends that Defendants received $1,003,945 in life insurance benefits which were placed in trust for the benefit of Defendants' clients to serve as security "in the event of trading losses." Id. at 5. Plaintiff contends that all retainer assets held by Tien and Ringstad are "directly traceable" to the life insurance benefits. Id. Plaintiff contends that the frozen assets are well below the amount needed to pay restitution. Plaintiff contends that the retainer assets "belong to defrauded customers" and cannot be used to pay Defendants' legal fees, regardless of whether business organizations can appear pro se. Id. at 6. Plaintiff contends that Defendant Wilson can proceed pro se if he is unable to hire counsel to represent him in this matter.
Defendants contend that the retainer assets should not be subject to the asset freeze because they were placed in client trust accounts for future legal services prior to August 13, 2011, the date the parties requested that a Consent Order be issued by the Court. (ECF No 18 at 3). Defendants contend that defendant corporations "must be represented by and appear only with legal counsel" who will not appear without payment. Id. at 4. Defendants contend that Defendant Wilson has no resources to hire an attorney. Attorney Ringstad contends that his firm is currently owed $13,756 for services rendered from August 1, 2011 to August 31, 2011. Attorney Tien contends that he is owed $7,710 for services rendered in August 2011. Defendants contend that the remaining $84,251.33 of the retainer assets should be released to cover the cost of litigation.
The Commodity Exchange Act authorizes the grant of a injunction or restraining order against a defendant: "[w]henever it shall appear to the [CFTC] that any registered entity or other person has engaged, is engaging, or is about to engage in any act or practice constituting a violation." 7 U.S.C. § 13a-1(a). The Commodity Exchange Act states: "upon a proper showing, a permanent or temporary injunction or restraining order shall be granted without bond." 7 U.S.C. § 13a-1(b). "Actions for statutory injunctions need not meet the requirements for an injunction imposed by traditional equity jurisprudence. Once a violation is ...