The U.S. Court of Appeals for the Federal Circuit has instructed courts to leave no doubt about their obligation to protect private property rights:
The intruder who enters clothed in the robes of authority in broad daylight commits no less an invasion of these rights than if he sneaks in in the night wearing a burglar’s mask. In some ways, entry by the authorities is more to be feared, since the citizen’s right to defend against the intrusion may seem less clear. Courts should leave no doubt as to whose side the law stands upon.
Pending before the U.S. Court of Federal Claims is a case challenging the over-zealous civil enforcement authority of the Securities and Exchange Commission as an unconstitutional taking. On January 3, 2023, attorneys from the Securities and Exchange Commission asked a federal district court judge in Colorado, in sealed filings to enter an ex parte order freezing the assets of all of Reven Holdings, Inc. and two related-Reven entities, as well as the personal assets of the three principals in the closely held pharmaceutical company.
In granting the SEC’s asset freeze, the district court noted that the Securities Act (the SEC’s authority for the asset freeze) dispenses with the factors normally required for issuance of injunctive relief, so the SEC need not show irreparable harm or balancing of the equities. The temporary restraining order was later converted to a preliminary injunction based on meeting this low burden of proof. That asset freeze has now wiped out all of Reven’s valuable and constitutionally protected property rights (business interests, patent rights, real property) once worth tens of millions (potentially billions) of dollars.
So were Reven and its principals accused of engaging in bilking their investors by, for example, running a pyramid scheme? No. Reven’s is accused of accounting errors and other hotly disputed disclosure omissions that have yet to be tried on the merits. Yet the asset freeze remains in place and has been for over two years.
Reven had been successfully engaged in the pharmaceutical research and development business since the late 1990s when Reven first created point-of-care diagnostic tests for HIV and several other pathogens and viruses.[1] In 2006, Reven acquired an early stage cardiovascular and anti-inflammatory intravenous drug treatment, which became the main focus of its development activities. In recent years, Reven’s primary focus has been developing and commercializing a cardiovascular and anti-inflammatory intravenous drug treatment called Rejuveinix, which is a major Reven asset and promises to be a first-in-class, multi-model agent for treating severe and difficult-to-treat diseases and other serious health conditions caused by infectious, inflammatory, cardiovascular, and metabolic diseases, including COVID.
Reven has now filed a taking case in the U.S. Court of Federal Claims, asking the Court to determine whether the Government, acting through the SEC, which Congress created to protect shareholders’ security investments, can—with no Fifth Amendment constitutional consequences—so excessively flex its regulatory muscles in an enforcement action that it destroys the entire value of a company and its property rights, decimating the shareholders’ investments in that company.
The Government has moved to dismiss Reven’s complaint, and the Court has yet to rule on that motion.
[1] See Compl. (Aug. 30, 2024), ECF No. 1 ¶ 6.
