telexfree-logoIn an attempt to fend off being found in contempt of court, Sann Rodrigues recently asserted his Fifth Amendment right, along with claiming ignorance of the court-ordered asset freeze against.

Claim the SEC:

Neither of these arguments is availing.

The Fifth Amendment defense and arguments against are pretty complex;

It is unclear whether he is claiming that the Fifth Amendment protects him from a finding of contempt for his failure to provide an accurate accounting in compliance with this Court’s June 10, 2015, or that it protects him from providing an amended accounting to purge him from a finding of contempt.

The SEC assert however that ‘neither of Rodrigues’ claims is (sic) availing‘.

I won’t go too much into it as a lot of case law is cited and the legal theory gets pretty heavy, suffice to say that the SEC claim Rodrigues has already waived his right to plead the Fifth.

On the claim Rodrigues was ignorant of the asset-freeze, some interesting points are made.

First is the obvious, that ignorance is not a valid defense. Second that despite claims to the contrary, Rodrigues was personally served and contacted by the SEC multiple times regarding the TRO and preliminary injunction.

Rodrigues did not respond to these efforts (which included a subpoena to appear at the preliminary injunction hearing, which was served in person), instead opting to ignore them in favor of a “rampant dissipation of assets”.

One particular juicy revelation by the SEC is that Rodrigues, through his attorney, appears to be lying about the status of his legal representation after the preliminary injunction was granted.

An email dated October 7th from Rodrigues’ attorney, Robert Eckard, to the SEC states:

Covar is irrelevant. He never represented Sann nor communicated with him. I called him and he is non-responsive.

Darren Covar is an attorney connected to DFRF Enterprises (used by Rodrigues to launder assets through).

In May 2015, Covar appeared in a DFRF marketing video and claimed he ‘used to be a special agent (who) worked for the government‘.

Asserting DFRF Enterprises was not a Ponzi scheme, Covar also claimed he was working with ‘the head of the SEC (and) the former head of the SEC‘ to ‘make sure everything is done properly‘.

Two months later, the SEC shut down DFRF Enterprises for being a $15 million dollar Ponzi scheme.

DFRF Enterprises owner is facing criminal charges. To date Covar has not been formally charged, nor has any litigation been filed against him for his role in DFRF.

Interestingly enough, the SEC claim Covar represented to them that in early May, around the same time he appeared in the DFRF Enterprises video, he ‘was assisting Rodrigues with the (TelexFree) case‘.

Accordingly, the SEC sent Covar a copy of the TRO and preliminary injunction granted against Rodrigues.

Following that up as part of these contempt proceedings, I again reiterate Rodrigues’ current attorney’s claim:

Covar is irrelevant. He never represented Sann nor communicated with him. I called him and he is non-responsive.

The smoking gun?

On April 25, 2014, two weeks before the Commission sent the email to Covar, he notarized the document signed by Rodrigues providing Joel Nunez with power of attorney to dispose of one of Rodrigues’ cars.

Bit hard for Covar to have never communicated with Rodrigues and notarize documents pertaining to Rodrigues attempting to mask his assets no?

It seems that Covar was indeed representing Rodrigues, but not in the sense of complying with the TRO so much as willfully conspiring to breach it.

A secondary lie exposed by the SEC is the claim that Rodrigues never received communication from the SEC regarding the TRO nor its extension.

In litigating these contempt proceedings, Rodrigues counsel inadvertently provided the SEC ‘a copy of the email notifying Mr. Rodrigues of the extension of the TRO and Asset Freeze by the Court‘.

Thus the SEC conclude Rodrigues ‘clearly received the email and knew about the extension‘.

A hearing on the matter has yet to be scheduled. Stay tuned…


Footnote: Our thanks to Don@ASDUpdates for providing a copy of the SEC’s October 14th response filing.


Update 21st October 2015 – A hearing on the Rodrigues contempt motion was held on the 20th of October.

The matter has been taken under advisement, with a decision expected either later this week or sometime next.