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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------------------------: SECURITIES AND EXCHANGE COMMISSION, : : Plaintiff, : : v. : : MEDLINK INTERNATIONAL, INC., : AURELIO VUONO a/k/a RAY VUONO, : and : JAMES ROSE a/k/a JAMESON ROSE, : : Defendants. : ----------------------------------------------------------------------------------:

12 Civ. 5325 (LDW-ETB)

PLAINTIFF SECURITIES AND EXCHANGE COMMISSIONS MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANT AURELIO VUONOS MOTION TO VACATE DEFAULT JUDGMENT

David Stoelting James K. Hanson Attorneys for Plaintiff SECURITIES AND EXCHANGE COMMISSION 3 World Financial Center New York, New York 10281 (212) 336-0080 Of counsel: Gerald A. Gross

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TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................................... ii PRELIMINARY STATEMENT .................................................................................................... 4 FACTUAL BACKGROUND ......................................................................................................... 6 Vuono was Served with the Summons and Complaint, and He Willfully Defaulted. ................................................................................................................ 6 Vuono Caused MedLinks Fraudulent 10-K Filing. ............................................. 10 Vuono Defrauded a MedLink Investor. ................................................................ 11 ARGUMENT ................................................................................................................................ 12 A. Vuonos Default was Willful. .................................................................................... 13 1. 2. Vuono was Properly Served...................................................................... 14 Alternative Methods of Service Have Already Been Used. ..................... 15

B. Vacating the Default Judgment Would Prejudice the Commission. .......................... 16 C. Vuono Did Not Present a Meritorious Defense. ........................................................ 17 CONCLUSION ............................................................................................................................. 19

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TABLE OF AUTHORITIES Cases Chira v. Lockheed Aircraft Corp., 634 F.2d 664 (2d Cir. 1980).............................................................................................. 14 Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238 (2d Cir. 1994)................................................................................................ 13 D.R.I. v Dennis, 2004 U.S. Dist. LEXIS 22541 (S.D.N.Y. 2004) ............................................................... 16 Davis v. Musler, 713 F.2d 907 (2d Cir. 1983).............................................................................................. 17 Ehrenfeld v. Mahfouz, 2005 U.S. Dist. LEXIS 4741 (S.D.N.Y. 2005) ................................................................. 16 Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir. 1993)............................................................................................ 13, 17 Finkel v. Hall-Mark Elec. Supplies Corp., 2011 U.S. District LEXIS 76716 (E.D.N.Y. 2011) .......................................................... 17 Intl Cargo & Surety Inc. Co. v. Mora Textiles Corp., 1991 U.S. Dist. LEXIS 8470 (S.D.N.Y. 1991) ................................................................. 13 Mercu-Ray Indus., Inc. v. Bristol-Myers Co., 392 F. Supp. 16 (S.D.N.Y. 1974) ....................................................................................... 9 Peterson v. Syracuse Police Department, 467 Fed. Appx. 31 (2d Cir. 2012) ..................................................................................... 13 Powerserve Intl Inc. v. Lavi, 239 F.3d 508 (2d Cir. 2001).............................................................................................. 13 Rio Properties, Inc. v. Rio Int'l Interlink, 284 F.3d 1007 (9th Cir. 2002) .......................................................................................... 16 SEC v. McNulty, 137 F.2d 732 (2d Cir. 1998).................................................................................. 13, 14, 17 Sony Corp. v. Elm State Electronics, Inc., 800 F.2d 317 (2d Cir. 1986)........................................................................................ 13, 17 ii

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Rules Fed. R. Civ. P. 55(c) ................................................................................................................. 5, 12 Fed. R. Civ. P. 60(b) ........................................................................................................... 5, 12, 13 Treatises 10 C. Wright, A. Miller & M. Kane, Federal Practice & Procedure Civil 2d, 2693 at 478 ................................................................................................................................. 13

iii

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Plaintiff Securities and Exchange Commission (Commission) submits this memorandum of law in opposition to the motion of Defendant Aurelio Vuono (Vuono) to vacate the default judgment entered against him on May 21, 2013. PRELIMINARY STATEMENT The Court entered a default judgment against Vuono and his co-defendants on May 21, 2013. Despite full knowledge of the existence of this action, and after authorizing his attorney to accept service of process on his behalf, Vuono has moved to vacate the default judgment against him, claiming that he was not served with a summons for this action. Vuono falsely states that he had not retained an attorney for this action, and denies that he has been personally served with the complaint so that [he] could enter a defense to this action. His motion should be denied. Vuonos motion is based on a multitude of misrepresentations and material omissions. Despite his current claim to the contrary, Vuono was in fact represented by an attorney in this action, and Vuono himself told Commission counsel in three email exchanges that he was represented. Moreover, Vuono was properly served with the Summons and Complaint because he authorized his attorney to accept service on his behalf. Vuono knew quite well that this action had been filed, but he deliberately chose not to appear. The Commission gave Vuono ample notice that it intended to seek a default judgment, sent him copies of the Commissions motion and the proposed final judgment, and served him with the judgment when it was entered. As a result, Vuonos statement to the Court in his motion that he only recently learned of the entry of the default judgment is false. Vuono had actual knowledge of the Commissions default motion and of the entry of the judgment.

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Motions to vacate a default judgment pursuant to Rule 55(c) and Rule 60(b) are decided based on the consideration of three criteria: (1) whether the default was willful; (2) whether setting aside the default would prejudice the adversary; and (3) whether a meritorious defense is presented. Vuonos motion fails to meet this test. First, Vuonos default was willful: Vuono was aware of the Commissions investigation and appeared twice for investigative testimony. On June 5, 2012, the Commission provided Vuono with a Wells Letter notifying him that the Commissions staff intended to recommend an enforcement action against him. Vuonos attorney responded with a letter on June 21, 2012. The Commission notified Vuonos attorney prior to filing the Complaint. Vuono evaded personal service of process for more than three months, and failed to execute a waiver of service that had been sent to him and his attorney. Vuono eventually authorized his attorney to accept service of process, but then failed to respond to the Complaint, and failed to seek an extension of time to do so. Although Vuono knew the Commission was seeking a default, because SEC counsel mailed and emailed him all filings connected with the motion, he failed to appear and oppose the Commissions motion. Vuono has not shown good cause for his failure to answer. Second, the Commission would be prejudiced if Vuonos motion were to be granted. Vuono has abused the process and continues to do so in his motion to vacate. Vuonos four sentence motion to vacate contains numerous falsehoods and offers no valid excuse for the default. Third, Vuono has failed to show that he has any basis upon which to mount a meritorious defense. Indeed, Vuono provides no indication of any defense to the charges against him, which involve filing a materially false and misleading Form 10-K with the Commission, and deliberately taking money from a MedLink investor by cashing the investors

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check when the investor had explicitly told him not to do so and Vuono had promised he would not. Accordingly, the Court should deny Vuonos motion to vacate the default judgment against him. FACTUAL BACKGROUND Vuono was Served with the Summons and Complaint, and He Willfully Defaulted. Beginning in June 2012, during the final stages of the Commissions year-long investigation, and continuing through January 2013, Vuono and his co-defendants were represented by Joel Schneider, Esq. (Schneider) of Somer & Schneider, LLP, Garden City, NY. See Declaration of James K. Hanson in Opposition to Aurelio Vuonos Motion to Vacate Default Judgment (Hanson Dec.) 2. Vuono was aware of the Commissions investigation and appeared twice for investigative testimony. Hanson Dec. 3. On June 5, 2012, the Commission provided Vuono with a Wells Letter notifying him that the Commissions staff intended to recommend an enforcement action against him. Id. Vuonos attorney responded with a letter on June 21, 2012, in which Schneider conceded that Vuono had acted improperly in causing MedLink to file a materially false Form 10-K. Hanson Dec. 4. Vuono explicitly told the Commission in writing at least three times that he was represented by Schneider. The Commission communicated with Schneider extensively by telephone, mail and email. On various occasions, Schneider told the Commission that he would try to negotiate a settlement on behalf of Vuono. However, according to Schneider, Vuono repeatedly failed to show up for meetings to discuss the contours of a settlement proposal. Eventually, on November 16, 2012, Schneider emailed a settlement offer to the Commission, which was subsequently rejected. Hanson Dec. 5.

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Vuono knew that this action had been filed. First, on October 23, 2012, the Commission notified Vuonos attorney that the action would be filed the next day. Hanson Dec. 6. Second, trading in MedLinks securities was suspended on October 24, 2012. Hanson Dec. 7. Vuono undoubtedly learned about this because he was MedLinks CEO. Third, on November 8, 2012, the Commission mailed and emailed Vuono a packet of materials relating to waiver of service, including copies of the Complaint, waiver of service letters, the Courts individual practices and rules, the ECF rules for the Eastern District of New York, and a pre-paid return UPS envelope. Hanson Dec. 8. Between November 28, 2012 and January 2013, the Commission attempted to contact Vuonos attorney, Schneider, by phone and email, but he did not respond. On December 5, 2012, Plaintiff mailed and emailed Vuono, to provide him with a copy of the Courts Scheduling Order dated November 14, 2012. In the letter, the Commission pointed out that it had not heard from Schneider since November 28, 2012, reminded Vuono that he had been sent the waiver of service package, and apprised Vuono that if he failed to return an executed waiver by December 10, 2012, the Commission would arrange for service by other means and would ask the Court to hold him responsible for the resulting costs. Hanson Dec. 9. In response to the Commissions December 5, 2012 email, Vuono stated I am represented by Joel Schneider. Vuono also stated that he had forwarded the email to Schneider. Hanson Dec. 10. When Vuono failed to execute and return the waiver of service, the Commission sought to serve Vuono using a professional process server. The process server was unable to locate Vuono. Hanson Dec. 11.

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Between December 5, 2012 and January 4, 2013, the Commission attempted to contact Schneider by telephone and email, but he did not respond. The Commission again emailed 1 Vuono on January 4, 2013, attaching the Complaint, Summons, and the Courts scheduling order, writing as follows: Despite our repeated efforts to contact Joel Schneider about the SECs enforcement action against MedLink and yourself, we have not heard back from him. Therefore, we must assume that you are no longer represented by him. In response, Vuono emailed, I will reach out to Mr. Schneider as I am represented by him and I will follow up with you on Monday [January 7, 2013]. The Commission replied to Vuono stating that the immediate issue is service of the summons and complaint. Mr. Schneider has failed to tell us that he is authorized by you to accept service[.] Vuono replied, I will reach him, but I am looking to settle this for myself and for medlink [sic]. I have spoken about this with Joel. Hanson Dec. 12. Vuono failed to follow up on January 7, 2013. On January 8, 2013, the Commission called Schneider and asked him if he was authorized to accept service on behalf of Vuono and MedLink. Schneider replied that he understood the issue and that he would seek permission from Vuono to accept service on his behalf. Hanson Dec. 13. By email dated January 10, 2013, Schneider stated I know I promised a call yesterday, however did not speak to Ray Vuono until this morning. He consented to me accepting service of process on his behalf. Please feel free to serve me when it is convenient. Hanson Dec. 13. In order to clarify the scope of Schneiders authority, the Plaintiff called Schneider by telephone on January 10, 2013, to confirm that Schneiders authorization to accept service
1

The Commission always emailed Vuono at the two email addresses he maintained at MedLink: rvuono@medlinkus.com and ray@medlinkus.com. Hanson Dec. 8. These email addresses were clearly valid and functional, as shown by the fact that Vuono replied to messages sent to these addresses. 8

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extended to MedLink as well as Vuono. Schneider stated that he was authorized to accept service on behalf of both defendants. Hanson Dec. 14. 2 Accordingly, on January 10, 2013, the Commission served the Summons and Complaint on Vuono and MedLink by mailing a copy of the documents to Schneider via UPS and delivering them to Schneider by email. Schneider received the documents and signed the delivery receipt. Hanson Dec. 15. The date for Vuono to answer, move or otherwise respond to the Complaint was February 1, 2013. On February 13, 2013, the Commission wrote to Schneider notifying him that the defendants responses were overdue, and that the Commission intended to seek a default. In that correspondence, the Commission noted that Schneider had represented that he was authorized to accept service on behalf of Vuono. Schneider did not respond to the letter. Hanson Dec. 16. On May 3, 2013, the Commission provided Vuono (and his co-defendants) and Schneider with a hard copy and an email version of its motion for default judgment. Hanson Dec. 17. On May 15, 2013, the Commission emailed a copy of the proposed final judgment to Schneider and Vuono, along with the co-defendants. Vuono responded with an email dated May 15, 2013, stating I am going to make an appearance in court for myself only and intent [sic] on defending myself pro se. Hanson Dec. 18. However, Vuono did not make an appearance in this action during the pendency of the Commissions motion for default judgment, and did not appear in the action until June 27, 2013, over a month after the entry of
2

Vuonos motion to vacate refers only to himself and does not seek to vacate the default judgment with respect to MedLink or Rose. In any case, as a non-attorney, Vuono cannot represent the corporate defendant, MedLink, nor can MedLink appear in this action pro se. Mercu-Ray Indus., Inc. v. Bristol-Myers Co., 392 F. Supp. 16, 19 (S.D.N.Y. 1974) (in the Federal Courts, the law is absolutely clear that a corporation cannot appear pro se, and that corporations must be represented by attorneys at law who are admitted to practice and are officers of the Court, subject to its control). 9

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the default judgment. On March 1, 2013, one month after Vuonos answer was due, and nearly two months after Vuono was served, the Commission requested a certificate of default from the Clerk of the Court. On March 4, 2013, the Clerk of this Court entered a notation of default. Hanson Dec. 19. On May 15, 2013, nearly four months after Vuono was served, and in light of his failure to respond in any way to the Complaint, the Commission filed a motion for default judgment. The motion was emailed and mailed to the defendants and Schneider. By order dated May 21, 2013, the Court ruled that default judgment be entered against the Defendants. The order was served on the Defendants by UPS on May 21, 2013, and the Commission also delivered copies of the order to the Defendants via email. Hanson Dec. 20. Vuono Caused MedLinks Fraudulent 10-K Filing. On April 25, 2011, MedLink filed its Form 10-K with the Commission.3 The 10-K was materially false and misleading because it included the electronic signature of MedLinks auditor, RBSM, although as of April 25, 2011, RBSM had not completed its audit of MedLink. RBSMs engagement letter provided that RBSMs reports should not be included in the SECs EDGAR electronic filing system until you [MedLink] have received a manually signed report from us [RBSM]. Hanson Dec. 21. As of the April 25, 2011 filing deadline, RBSMs audit of MedLink was not completed. RBSMs auditors informed MedLink that the audit was incomplete via email on April 25, 2011. Hanson Dec. 22.

MedLink had previously obtained a ten-day extension from the original filing deadline of April 15, 2011. 10

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On April 25, 2011, RBSMs president sent Vuono an email with an attached letter to MedLinks Board of Directors in which RBSM stated: (i) RBSM had not performed an audit; (ii) RBSM had not provided MedLink with a manually signed copy of an audit report; (iii) RBSMs engagement letter with MedLink required that audit reports not be included in filings until MedLink received a manually signed report; and (iv) MedLinks Form 10-K should not have included an audit report with RBSMs electronic signature. RBSMs letter also requested that MedLink take immediate corrective action, including the filing of an amendment to the Form 10-K removing the report and disclosing that MedLink had not previously been authorized by RBSM to include the report. Hanson Dec. 23. On April 27, 2011, MedLink filed a Form 8-K with the Commission stating that its December 31, 2009 and 2010 financial statements could no longer be relied upon because its auditor had notified MedLink that MedLink had not obtained a manually signed copy of the audit report. Hanson Dec. 24. On June 21, 2012, Vuonos attorney, Schneider, wrote to the Commission concerning his clients culpability. In the letter, Schneider conceded that Mr. Vuono and Mr. Rose each acknowledge that they acted improperly by allowing the 10K for December 31, 2010 to be filed with the Audit Report of RBSM containing their electronic signature without obtaining their authorization or approval. Schneiders letter explicitly conceded that the motivation for the improper conduct was to attempt to avoid a default under the [sic] certain debt instruments. Hanson Dec. 4. Vuono Defrauded a MedLink Investor. In approximately April 2010, Vuono solicited MedLink Investor A to invest in a private placement of MedLink stock. On April 13, 2010, Investor A signed a subscription agreement

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providing for a $200,000 investment in exchange for 210,526 shares of MedLink common stock and an equal number of warrants exercisable within one year of purchase. The warrants could be exercised in one of two ways: (i) by purchasing 210,526 MedLink shares at $0.95 per share (Cash Option) or (ii) purchasing significantly fewer shares without payment (Cashless Option). Investor A paid the $200,000, and MedLink provided him with the stock and warrants. Hanson Dec. 25. In April 2011, shortly before the warrants were to expire, Vuono, however, convinced Investor A to give MedLink a check for $149,473.50 in return for 210,526 shares of MedLink stock based on Vuonos promise that he would not deposit the check until Investor A had sufficient funds. On May 1, 2011, Investor A sent Vuono an email saying that MedLink was not authorized to cash the check and instructing MedLink to return it. Hanson Dec. 26. On May 4, 2011, Vuono told Investor A via email that he would not deposit the check. Hanson Dec. 27. On May 13, 2011, MedLink deposited Investor As check into MedLinks corporate bank account. Hanson Dec. 28. Despite repeated requests, Vuono never returned Investor As $149,473.50, nor did he it issue any MedLink stock to Investor A from the conversion of the warrants. Hanson Dec. 29. ARGUMENT Vuonos motion to vacate the default judgment is brought pursuant to Rules 55(c) and Fed. R. Civ. P. 60(b) of the Federal Rules of Civil Procedure. Rule 55(c) permits a party to be relieved of default "for good cause shown," whereas a default judgment may only be set aside in accordance with Rule 60(b). While Rule 55(c) does not define "good cause," the U.S. Court of Appeals for the Second Circuit has advised District Courts to consider three criteria in deciding a Rule 55(c) motion: (1) whether the default was willful; (2) whether setting aside the default

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would prejudice the adversary; and (3) whether a meritorious defense is presented. Powerserve Intl Inc. v. Lavi, 239 F.3d 508, 514 (2d Cir. 2001) (quoting Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993)). The same factors are applied in the context of a Rule 60(b) motion to set aside a default judgment, although they are applied more rigorously, and the district court must resolve any doubts in the defaulting party's favor. Id; Peterson v. Syracuse Police Department, 467 Fed. Appx. 31, 33 (2d Cir. 2012). 4 These factors should be balanced against the competing interest in maintaining an orderly efficient judicial system in which default is a useful weapon for enforcing compliance with the rules of procedure. Sony Corp. v. Elm State Electronics, Inc., 800 F.2d 317, 320 (2d Cir. 1986) (quoting 10 C. Wright, A. Miller & M. Kane, Federal Practice & Procedure Civil 2d, 2693 at 478.). A. Vuonos Default was Willful. In order to establish willfulness, the Commission need not show bad faith on the part of the defendant, but must show more than mere negligence or carelessness. Courts have found defaults willful where the conduct of the adversary was egregious and was not satisfactorily explained. SEC v. McNulty, 137 F.2d 732, 738 (2d Cir. 1998) (failure to file answer after repeated warnings from SEC that it intended to seek a default held willful). See Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238, 243-44 (2d Cir. 1994) (defendants had purposely Rule 60(b) provides six reasons for relieving a party from a final judgment, including (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence[;] (3) fraud. . ., misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment on which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment have prospective application; (6) any other reason justifying relief from the operation of the judgment. Rule 60(b) also allows the court to vacate a judgment against a defendant who was not "actually personally notified." Intl Cargo & Surety Inc. Co. v. Mora Textiles Corp., 1991 U.S. Dist. LEXIS 8470 (S.D.N.Y. 1991).
4

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evaded service for months for untenable reasons); Chira v. Lockheed Aircraft Corp., 634 F.2d 664, 666 (2d Cir. 1980) (default found willful where adversary failed, for weak reasons, to comply with scheduling orders). Vuono makes no argument that his default was a result of negligence or carelessness. Rather, the factual record is clear: Vuono was represented by counsel. He was notified of the existence of this action. Vuono was properly served and given far more than the mandated time to respond before the Commission moved to enter the default. The Commission also communicated with Vuonos attorney, Schneider, warning him that the defendants answers were overdue. When the Commission served Vuono with its motion for default judgment, Vuono responded that he intended to appear pro se, but he failed to do so. When the default judgment was entered, the Commission served it on Vuono, but Vuono failed to oppose the default motion until over a month after entry of the Courts order. Furthermore, Vuonos claim in his motion to vacate that he had just learned that the default judgment had been filed is not tenable. The Commission sent Vuono and Schneider copies of the judgment by mail and email on May 29, 2013. Here, as in SEC v. McNulty, the defendants failure to answer is willful because the Commission repeatedly warned Vuono that it intended to seek a default judgment, and actually provided him with copies of its motion and proposed order well ahead of time. Vuono knew the Commission had filed the motion for default judgment: he responded to the Commissions May 15, 2013 email attaching the proposed final judgment, claiming that he would make an appearance. Even then, Vuono failed to appear. 1. Vuono was Properly Served. In his motion, Vuono claims that he had not retained an attorney for this action. This is false. Vuono represented to the Commission in writing on at least three occasions that he was

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represented by Schneider. Schneider engaged in settlement negotiations with the Commission on behalf of Vuono. Ultimately, Schneider accepted service on behalf of Vuono. However, between November 28, 2012 and early January of 2013, Schneider failed to communicate with the Commission. Thus, when the Court issued a scheduling order, the Commission sent it to Vuono by mail and email on December 5, 2012. In response, Vuono confirmed that he was represented, stating on December 5, 2012, I am represented by Joel Schneider. When the Commissions process server was unable to locate him, the Commission contacted Vuono on January 4, 2013, to encourage him to execute a waiver of service. Vuono replied on January 4, 2013: I will reach out to Mr. Schneider as I am represented by him, and again in a separate email message on January 4, 2013, I will reach him I have spoken about this with Joel. The Commission also contacted Schneider and requested that he take steps to facilitate service. Schneider told the Commission both by email and in a telephone call on January 10, 2013, that he was explicitly authorized by Vuono to accept service of the Summons and Complaint. Moreover, the Commission had previously sent copies of the Summons and Complaint to Vuono on at least two occasions, once as part of the waiver of service package, and again when writing to inquire about service of process. Vuono unquestionably had actual notice of the existence of this action, had discussed the need to accept service with the Commission, and told the Commission he would reach Schneider. 2. Alternative Methods of Service Have Already Been Used. The Court may conclude that service of the Summons and Complaint on Schneider was not sufficient. In the alternative, the Commission requests that the Court deem the Commissions efforts to apprise Vuono of the action against him to be adequate under the

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circumstances. In cases where defendants, as here, have evaded service for several months, the courts have fashioned alternative methods of service. In the Federal Court system, service has been ordered by certified mail, by publication, and even by e-mail, provided that the e-mail address was reliable. See, e.g., D.R.I. v Dennis, 2004 U.S. Dist. LEXIS 22541 (S.D.N.Y. 2004) (requiring service by certified mail, return receipt requested, by publication, and by e-mail on the defendant); Rio Properties, Inc. v. Rio Int'l Interlink, 284 F.3d 1007, 1017 (9th Cir. 2002) (Under Rule 4, "we conclude not only that service of process by e-mail was proper - that is, reasonably calculated to apprise RII of the pendency of the action and afford it an opportunity to respond - but in this case, it was the method of service most likely to reach RII."). With respect to e-mail, while some courts have upheld service by e-mail, some courts have chosen to restrict such service to e-mail addresses that are demonstrably connected to the defendants. See, e.g., Ehrenfeld v. Mahfouz, 2005 U.S. Dist. LEXIS 4741 at *8 (S.D.N.Y. 2005) ("Service via email and service on the place of business, however, do not meet the constitutional standard under the circumstances. Although the courts have upheld service via e-mail, those cases involved e-mail addresses undisputedly connected to the defendants and that the defendants used for business purposes."). Here, the Commission repeatedly mailed the Summons and Complaint to Vuonos attorney, and to Vuono himself at two e-mail addresses associated with Vuonos business, ray@medlinkus.com and rvuono@medlinkus.com. These e-mail addresses were undisputedly connected to Vuono, as is shown by the fact that he reliably responded to messages send to those addresses. B. Vacating the Default Judgment Would Prejudice the Commission. Vuono committed serious violations of the Federal securities laws. Although delay is not by itself a sufficient reason to deny a motion to vacate a default, the Court may consider that

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delay could result in the loss of evidence, create increased difficulties of discovery, or provide greater opportunity for fraud or collusion. Davis v. Musler, 713 F.2d 907, 916 (2d Cir. 1983). Here, the delay is being caused by a defendant who is misrepresenting whether he had counsel and is pretending that he lacked notice of this action when the record is clear that he had actual notice. Vuonos willful conduct and willingness to abuse the process, which continues with his inaccurate and misleading motion to vacate, should not be condoned by the Court. Granting Vuonos motion would simply allow him to continue his efforts to abuse the process, and would force the Commission to expend its resources on a case where there is no meritorious defense. In any event, even the absence of prejudice would not entitle Vuono to relief from the judgment. See Finkel v. Hall-Mark Elec. Supplies Corp., 2011 U.S. District LEXIS 76716 (E.D.N.Y. 2011). As noted in Finkel, the absence of prejudice to the nondefaulting party [does] not in itself entitle the defaulting party to relief from the judgment, rather a district court has discretion to deny the motion to vacate if it is persuaded that the default was willful and is unpersuaded that the defaulting party has a meritorious defense. 2011 U.S. District LEXIS 76716 at *12 (quoting SEC v. McNulty, 137 F.3d at 738). C. Vuono Did Not Present a Meritorious Defense. A party seeking to vacate an entry of default must proffer some evidence beyond conclusory denials to satisfy the meritorious defense factor. [T]he moving party on a motion to reopen a default must support its general denials with some underlying facts. Sony Corp., 800 F.2d at 320. While defendants need not establish their defense conclusively, they must present evidence of facts that, if proven at trial, would constitute a complete defense. SEC v. McNulty, 137 F.3d at 704, quoting Enron Oil Co. v. Diakuhara, 10 F.3d at 98) (emphasis added). Here, Vuono failed to present any evidence of facts that, if proven at trial, would

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constitute a complete defense. Vuonos motion, in its entirety, states as follows: My name is Aurelio Vuono and I am a pro se defendant in the above referenced case. I have just learned that there is a default judgment that was filed against me on May 21, 2013 in the amount of $130,000 in the above captioned case. I make this motion to set aside the default judgment to Fed. R. Civ. P. 55(c) and 60, because I was not served with a summons for this action. I had not retained an attorney for this action and I have not been personally served with the complaint so that I could enter a defense to this action. The Commission recognizes that Vuono is a pro se litigant at this point, but notes that even in his brief motion to vacate, Vuono has misrepresented the facts and failed to explain why he defaulted when, as shown above, he had ample notice of the existence of this action. Vuonos motion fails to provide any showing that he would have a defense to the allegations in the Complaint. In addition to the absence of any legal foundation, Vuonos motion is not supported by affidavits or any other underlying facts to constitute a meritorious defense. As shown above, Vuonos counsel has conceded that his clients conduct in causing the false Form 10-K to be filed was improper, and has admitted that Vuonos motivation for causing the filing was his desire to avoid a default on MedLinks outstanding debt. The documentary paper trail shows that Vuono cannot mount a defense against the allegations in the Complaint regarding the Form 10-K. Moreover, the email documentation with respect to Investor A clearly shows that Vuono ignored Investor As instruction not to cash his check. Vuono has no defense to the Commissions allegations. In his correspondence with the Commission, Vuono purported to be interested in obtaining a settlement. In November 2012, after the Complaint had been filed, Vuonos attorney made a settlement proposal which was rejected by the Commission. However, Vuono continued to communicate with the Commission into January 2013 regarding his desire to settle. This does not, however, provide Vuono with a defense. Even if the parties were

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engaged in on-going settlement negotiations, Vuono was still under an obligation to answer or otherwise respond to the Complaint. Moreover, Vuono never requested and the Commission never agreed to an extension of time for him to respond to the Complaint. Vuono has failed to establish good cause to vacate the default entered by this Court. Vuonos default was willful, and he has failed to demonstrate that he possesses a meritorious defense. Simply put, Vuono has not even come close to meeting his burden of proving that good cause exists for vacating the entry of default. CONCLUSION For the reasons set forth above and in the accompanying declaration, Plaintiff respectfully requests that Defendant Aurelio Vuonos Motion to Vacate Default Order be denied in all respects. Dated: July 26, 2013 New York, New York

Respectfully submitted, ___________/s/_________________ David Stoelting James K. Hanson Attorney for Plaintiff Securities and Exchange Commission 3 World Financial Center, Suite 400 New York, New York, 10281-1022 Of counsel: Gerald A. Gross

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