Telephonic Oral Argument - S-21262A-23-0224 - Sterling Investments Advisor LLC d/b/a Sterling Advisor Group et. al S-21262A-25-0037 - Sterling Investments Advisor LLC d/b/a Sterling Advisor Group, et. al et al. - Aug 11, 2026
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What is the purpose of the oral argument and which docket numbers are being addressed?
Okay, let's go on the record at this time. Or oral argument. And the consolidated matters of Sterling Investment Advisor LLC at all. The docket numbers are S dash two one two. Six two A Dash twenty three dash zero two two four. And S dash two one two six two A Dash twenty five. Dash zero zero three seven. I'm administrative judge Mark Pranny. I will be presiding over this matter. We will begin by taking appearances for the record, starting first with counsel for the securities division.
Good morning. This is Elizabeth Schmidt, Council for the Securities Division.
Good morning, Ms. Schmidt. And for
the respondents. Good morning, your honor. This is Tim Salvo with the law firm of Osborne Maladon, appearing on behalf of the respondents.
Well, Mr. Sabo. Uh, we're here for oral argument on motion for Issuance of an administrative subpoena. And the respondents have also filed a Second motion for issuance of administrative subpoena. uh which I'm also willing to listen to oral argument on at this time. Mr. Sabu, it's your motion, so I will we'll let you kick things off.
Thank you, Your Honor. Uh The motions before you are for two administrative subpoenas to provide materials essential for the respondents to prepare their defense. The proposed subpoenas are narrowly tailored and do not seek all materials in the division's files. First, the Commission's rules provide for discovery through the incorporation of the civil rules. This is why there is extensive discovery in utilities division cases, which are governed by the very same set of rules. I understand a rule change is in process. But the changes have not yet been enacted and the current rules must be applied. Further, the commission also has a specific rule for administrative subpoenas, and that rule is uh A Arizona Administrative Code R fourteen-three-1090.
And uh rule one oh nine oh applies a unreasonable or oppressive standard. And the proposed subpoenas are not unreasonable or oppressive. Second, uh if for any reason you find that the commission's rules do not provide for discovery, the Administrative Procedure Act provides a floor or baseline amount of discovery that must be provided. And I'll note the the APA is it is a floor, so agencies can provide for more. uh Discovery then is allowed in the APA, but obviously they can't provide for less. And the specific provision of the APA that we're relying on, Your Honor, is ARS 411062A4. And that statute provides that an agency may issue subpoenas on a showing of reasonable need. In the division attempts to equate the reasonable need standard to the substantial need standard for disclosure of work product, but the differing terminology between these two standards, reasonable need and substantial need.
demonstrates that these are in fact two different standards. And the statutory touch to uh touchstone here is simply reasonableness. And each request is reasonable. While the respondents are jointly represented, they each have their own individual rights. that must be respected. We have respondents such as Lance and Valley Vinard. who have had little or no involvement with the business for uh many years. Uh they're they're retired quite quite a few years ago. Uh that Lance and Valerie are the the parents of the the the other three uh respondents, Your Honor.
How do the respondents justify their motions for two administrative subpoenas?
Uh we also have respondents like Robert and Michelle Kelly. Uh Robert was a low-level employee who has been dragged into this case in the in the second notice uh in TCD. uh These respondents each deserve to know what remedies the division is seeking against them individually. In addition, Your Honor, there are real questions here about the calculation of restitution if liability is found. Not all the respondents were involved in all matters. Again, Lance and Valley Venard are long retired, and Robert Kelly had minimal involvement. Further, given the large and ongoing recoveries through the ECRIALT receiver, calculation of offsets will be a significant issue here if liability is found. The division refuses to tell any of the respondents how much restitution the division is seeking against them.
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Agenda
8 items
1
What is the purpose of the oral argument and which docket numbers are being addressed?
0:00–4:36
2
How do the respondents justify their motions for two administrative subpoenas?
4:36–11:03
3
What legal standards (reasonable need, APA, A.A.C. R 14‑3‑1090) support the subpoena requests?
11:03–15:47
4
Why is disclosure of restitution amounts and administrative penalties critical for the respondents?
15:47–20:08
5
What is the division’s position on providing the requested accounting records and exhibits?
20:08–25:17
6
How will the division handle the ongoing production of documents and redactions?
25:17–30:37
7
Are there any remaining questions or issues before the judge issues a procedural order?
30:37–34:45
8
What are the final procedural steps and the outcome of today’s hearing?
34:45–38:38
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