Judgment against Virtual Communications Corporation CFO affirmed by Bankruptcy Appellate Panel

LAS VEGAS, NEVADA, UNITED STATES, April 4, 2023/EINPresswire.com/ -- On April 3, 2023 the 9th Circuit Bankruptcy Appellate Panel affirmed a Judgment against Vernon Rodriguez, the CFO of Virtual Communications Corporation, a Nevada corporation.

Vernon Rodriguez was found liable for Virtual Communications sale of unregistered securities, the result of a trial held in the Clark County, Nevada District Court in February, 2020. He was ordered to pay $960,401 to a group of Plaintiffs who had invested in Virtual Communications’ 9% Promissory Notes.

Also found liable for the unregistered note sales was VCC’s Chairman Ronald Robinson, who guaranteed the notes, but refused to pay after VCC defaulted.

After the Judgment, Mr. Rodriguez filed for bankruptcy, and the successful Plaintiffs commenced an adversary proceeding contesting the discharge under 11 USC 523(a)(19). After filing a motion for summary judgment, Plaintiffs’ Judgment was affirmed by Bankruptcy Judge Mike Nakagawa, and Mr. Rodriguez appealed to the 9th Circuit.

On February 28, 2023, the Bankruptcy Appellate Panel sitting in Las Vegas heard oral argument. The primary issue was the scope of control person liability under 523(a)(19), and whether a control person of the issuer that sold unregistered securities could discharge his debt in bankruptcy.

The court, in a decision published on April 3, 2023, found that 523(a)(19) does not require the conduct giving rise to liability to have been personally committed “by the debtor.” In cases where there are trial court findings that the debtor engaged in the misconduct giving rise to the securities law violations, issue preclusion prevents a discharge under 523(a)(19). The Court distinguished the Rodriguez case from SEC v. Sherman, 406 B.R. 883 (C.D. Cal. 2009), noting that a finding of a securities law violations under the state securities laws (here, control person liability under the Nevada Securities Act) is sufficient to deny a discharge to a debtor.

This decision provides guidance to litigants bringing claims against control persons who participate in underlying securities law violations. Findings of Fact from the trial court setting forth the specific misconduct giving rise to the securities law violations, as well as a statement that the control person is jointly and severally liable will help establish issue preclusion, and ensure that the judgment is upheld in the bankruptcy court.

David Liebrader, who represented the Plaintiffs throughout the state, bankruptcy, and appellate court proceedings has been representing investors in claims against financial planners and sellers of unregistered securities for the past 30 years.

David Liebrader
The Law Office of David Liebrader
+1 702-380-3131
email us here
Visit us on social media:
LinkedIn

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.