A courtroom clash unfolding like a high-stakes chess match left a federal appeals panel openly questioning whether a German national undercut his own defense in a long-running $4.6M SEC german suit by failing to answer discovery requests aimed at U.S. jurisdiction.
On Tuesday, the First Circuit examined an appeal by Raimund Gastauer, 80, who is fighting a default judgment in a U.S. Securities and Exchange Commission case tied to an alleged $150 million international pump-and-dump scheme. Judges suggested Gastauer’s silence in discovery may have weakened his bid to escape the judgment.
“Isn’t that a waiver by your client?” Judge William Kayatta asked Gastauer’s attorney, cutting to the heart of the dispute.
Discovery Silence Raises Red Flags
Gastauer is a relief defendant in the SEC’s civil enforcement action, which seeks to claw back proceeds allegedly funneled through international accounts. His counsel, Johannah Cassel-Walker of Hogan Lovells LLP, argued that Gastauer never consented to U.S. jurisdiction and made that clear through letters sent by German counsel to both the SEC and the court.
Cassel-Walker told the panel that the SEC itself forfeited its chance to pursue an alternative jurisdiction theory after the First Circuit ruled in 2024 that the agency failed to show sufficient U.S. ties. She also argued there was no proper basis to reopen discovery after that decision.
