ARIEL PREF. RETAIL GRP v. CW CAPITAL MGMT.(Barton Doctrine)

The Court determined that it lacks subject matter jurisdiction over the Receiver and the property manager pursuant to the Receivership Order, and under the Barton doctrine.. In Barton v. Barbour, the United States Supreme Court held that absent statutory authority, a receiver cannot be sued (or initiate suit) without leave of the appointing court. Barton […]

Belsome v. Rex Venture Group, LLC (Stay of Litigation)

The District Court reviewed a petition to lift a stay of litigation using the factors set forth in S.E.C. v. Wencke, 742 F.2d 1230, 1231 (9th Cir. 1984): (1) whether allowing the stay to remain in place preserves the status quo, or whether the moving party will suffer substantial injury if not allowed to proceed; […]

Bendall v. Lancer Management Group, LLC (Definition of “Claim”)

523 F. App’x 554, 556 (11th Cir. 2013) The Eleventh Circuit, in an unpublished decision, found that the definition of “claim” included a contingent right to payment of attorneys’ fees by a receivership entity under a contractual indemnification provision, such that the ‘right’ would be subject to the claims bar date established by the Court […]

Carney v. Beracha (Personal Jurisdiction)

3:12-CV-00180 SRU, 2014 WL 533727, —F.Supp.2d— (D. Conn. Feb. 10, 2014) The court found that defendants consented to jurisdiction where they previously sought to intervene in the related SEC action and also filed claims with the Receiver, which submitted them to the court’s jurisdiction. Furthermore, the court found that it had personal jurisdiction over the […]

Carney v. Lopez (Personal Jurisdiction, Definition of “Ponzi Scheme”)

The District Court adopted the widely accepted principle that the interplay between Fed.R.Civ.P. 4(k) and 28 U.S.C. § 754 and § 1692 provides the basis for nationwide personal jurisdiction. Citing S.E.C. v. Bilzerian, 378 F.3d 1100 (D.C. Cir. 2004), Am. Freedom Train Found. v. Spurney, 747 F.2d 1069 (1st Cir. 1984), and Haile v. Henderson […]

Carney v. Marin (Personal Jurisdiction)

The court found that there was personal jurisdiction over the defendants despite that the receiver did not make a filing within ten days of his initial appointment, and 28 U.S.C. § 754 requires the receiver to file his order of appointment and copies of the complaint within ten days after entry of the order appointing […]

CFTC v. Eustace (Distributions)

2008 WL 471574 (E.D.PA.2008) CFTC v. Eustace, 2008 WL 471574 (E.D.PA.2008), is a good case to support the use of pooling funds and pro rata distributions in receivership cases. In this case, a court-appointed receiver requested approval of a second interim distribution to investors of $72M in settlement proceeds. In the first interim distribution, the […]

CFTC v. Forefront Investments Corp. (Authority to File Pleadings)

2007 WL 2155739 (E.D.Va. July 25, 2007) In CFTC v. Forefront Investments Corp. , 2007 WL 2155739, *2 (E.D.Va. July 25, 2007) the court held that principals of an entity that had been placed in Receivership may not file pleadings on behalf of/or in the name of the Receivership entity without consent of the Receiver. […]

CFTC v. Lake Shore Asset Management Ltd. (Claims Procedure)

646 F.3d 401 (7th Cir. 2011) CFTC v. Lakeshore Asset Management Ltd. (“LSAM”) is an important case because it defines the rule for the acceptance of late-filed claims in federal receiverships in the 7th circuit. The order appointing the receiver for LSAM provided that late claims would be barred “unless they can demonstrate to the […]

CFTC v. Lake Shore Asset Management Ltd. (Criminal Contempt Referral)

2007 WL 4591005 (N.D. IL December 21, 2007) In Commodity Futures Trading Com’n v. Lake Shore Asset Management Ltd., 2007 WL 4591005 (N.D. IL December 21, 2007) the Court ruled that a defendant corporation and its president must show cause why they should not be referred to the United States Attorney for investigation and possible […]

CFTC. v. RFF GP, LLC (Distribution Plan)

The Magistrate Judge recommended denying the objection of a secured creditor who opposed the receiver’s distribution plan as it prioritized investor claims over the claims of creditors. In explaining the propriety of granting defrauded investors a higher priority than creditors, the court cited Quilling v. Trade Partners, Inc., 103CV236, 2006 WL 3694629 (W.D. Mich. Dec. […]

Commodity Futures Trading Commission v. Walsh, et al. (Distribution Plans – Fairness of Pro-Rata, Net Investment Based Plan)

712 F.3d 735, (2nd Cir. 2013) (April 3, 2013) Parallel CFTC and SEC enforcement actions were instituted against Ponzi scheme perpetrators who created several entities to offer various investment vehicles for pursuing an index arbitrage strategy to pension funds or investment arms of government entities. The court-appointed receiver for defendants’ assets recommended a plan for […]

Donell v. Kowell (Recovery of Investment Profits)

Donell is a very good case for receivers pursuing claims against investors who profit from a Ponzi Scheme. In Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008) the Ninth Circuit affirmed the District Court’s granting of summary judgment in favor the court-appointed receiver on a Uniform Fraudulent Transfer Act (UFTA) claim against an investor […]

Eberhard v. Marcu (Standing/In Pari Delicto)

530 F.3d 122 (2d Cir. 2008) In Eberhard v. Marcu, 530 F.3d 122 (2d Cir. 2008), a Receiver appointed in an SEC enforcement action brought suit against a third party, the mother of the Defendant in the SEC action, to set aside the transfer of the Defendant’s interest in a Canadian company as a fraudulent […]

Feinstein ex rel. WML Gryphon Fund LLC v. Long (Standing of Receiver)

2011 WL 3555727 (E.D. Wis. Aug. 11, 2011) (slip copy) Feinstein ex rel. WML Gryphon Fund LLC v. Long is a useful case because it highlights the limits on a receiver’s standing based on the principal that a receiver stands in the shoes of the receivership entity and can only sue for harm caused to […]

FTC v. Cleverlink Trading Limited & Quilling v. Stark (Nationwide Personal Jurisdiction/28 U.S.C. 754)

The following cases stake out the court’s ability to excercise nationwide personal jurisdiction in SEC and FTC cases. Being able to hale defendants from around the country and possibly around the world (see footnote 5 in the Cleverlink case) to the receivership court creates tremendous efficiences for the receivership, and is a prowerful weapon in […]

Gradel v. Piranha Capital (Jurisdiction of Receivership Court)

2007 WL 2120319 (7th Cir. March 18, 2007) Plaintiffs sued in Illinois for securities law violations and to secure attachment of funds of defendant. Subsequently, the CFTC sued in California, where an injunction was granted and a receiver was appointed to recover funds for investors. The Court of Appeals for the 7th Circuit reversed a […]

Gustin v. Hoffman (Standing)

2008 WL 2949443 (M.D.FL 2008) In Gustin v. Hoffman, 2008 WL 2949443 (M.D.FL 2008), several Plaintiffs who were also creditors of the Receivership Estate sought to bring an independant cause of action against the defendants in the underlying SEC enforcement action (as well as those who received fraudulent transfers from those individuals) despite the fact […]

Hays v. Adam (Standing of Receiver)

Hays v. Adam 2007 WL 1074092 (N.D.Ga. March 15, 2007) The attached case arises out of an SEC action in a ponzi scheme case in the Northern District of Georgia. The Receiver brought claims for unjust enrichment against marketers seeking to recover commissions. The Court granted the Receiver’s Motion for Summary Judgment based on conclusions […]

Hodgson v. Gilmartin (Venue/28 U.S.C. §754)

2006 WL 2707397 (E.D.Pa. September 18, 2006) In the past, there has been little detailed consideration of whether the creation of extra-territorial “ancillary” personal jurisdiction through the interaction of 28 U.S.C. §754 and 28 U.S.C. §1692 extends to a similar creation of ancillary venue in the Receivership Court as well. (Several cases have so held, […]

Janvey v Democratic Senatorial Campaign Committee, Inc., et al. Standing and Imputed Knowledge of Ponzi Scheme Perpetrator to His Captive Corporations

Janvey v. Democratic Senatorial Campaign Committee, Inc., 712 F.3d 185, 189-92 (5th Cir. 2013) (March 18, 2013). Citing the teachings of the Seventh Circuit in Scholes v. Lehman, 56 F.3d 750, 753-55 (7th Cir. 1995), the Fifth Circuit holds that the Receiver of assets of a Ponzi scheme perpetrator has standing to bring Texas UFTA […]

Janvey v. Alguire (Standing)

Janvey v. Alguire, —Fed.Appx. —, 2013 WL 4647293 (5th Cir. 2013) is a case which highlights issues regarding the standing of a receiver. Here, the Fifth Circuit reversed the decision of a district court denying a motion to compel arbitration. The district court had determined that an arbitration agreement between the entity in the receivership […]

Janvey v. Democratic Sentatorial Campaign Committee, Inc. (Standing under the UFTA, Statute of Limitations)

Janvey v. Democratic Sentatorial Campaign Committee, Inc., — F.3d — (5th Cir. 2012), 2012 WL 5207460 (Oct. 23 2012) is another in the line of cases holding that Receivers have standing to represent creditors in UFTA claims, this time in the Fifth Circuit. In addition to finding that Receivers may stand in the shoes of […]

Janvey v. Suarez (UFTA Statute of Limitations)

Following the Fifth Circuit’s holding in Janvey v. Democratic Senatorial Campaign Comm., Inc., 712 F.3d 185 (5th Cir. 2013), the District Court found that the discovery period tolling the statute of limitations for actual intent fraudulent transfer claims does not automatically run from the date of the appointment of the receiver. Furthermore, the Court explained […]

Klein v. King & King & Jones (Fraudulent Transfers)

Klein v. King & King & Jones, 571 F. App’x 702 (10th Cir. 2014)—the Tenth Circuit affirmed an order granting summary disposition in favor of a receiver in an action to recover payments made from an entity in a Ponzi scheme under the UFTA. In reviewing the order, the appellate court found that in order […]

Koehler v. The Bank of Bermuda (Turn Over Orders)

Re: Turn Over Orders In this case the New York Court of Appeals held that a Bermuda bank holding stock certificates in Bermuda of a judgment debtor could be required to turn those certificates over to the judgment creditor to satisfy the judgment as long as the New York court had jurisdiction over the bank, […]

Miller v. Taber (Fraudulent Transfers)

Miller v. Taber, 1:12-CV-74-DN, 2014 WL 317938 (D. Utah Jan. 29, 2014. The District Court granted a Receiver’s motion for summary judgment in a fraudulent transfer action to recover commissions and salaries received by individuals for referring investors to Ponzi scheme entities. Acknowledging the Ponzi presumption, that all transfers by a Ponzi scheme are presumed […]

Norwest Bank v. Malachi Corp. (Court has Broad Powers in Equity Receivership)

2007 WL 2302167 (6th Cir. August 13, 2007) Norwest Bank v. Malachi Corp., 2007 WL 2302167 (6th Cir. August 13, 2007), reiterates the basic rule that a district court has “broad powers and wide discretion” in fashioning relief in an equity receivership proceeding. *6. Relying upon SEC v. Basic Energy & Affiliated Resources, Inc., 273 […]

Quilling v. Cristell (Nationwide Personal Jurisdiction/28 U.S.C. §754)

The following case is important because it reaffirms that the receivership court has nationwide personal jurisdiction in supplemental proceedings. – Phil Stenger Decisions continue to multiply upholding the extra-territorial jurisdiction of a receivership court. Quilling v. Cristell reaches the same result in North Carolina as the Texas district court reached in Quilling v. Stark: due […]

Quilling v. Trade Partners, Inc. (Distribution Plan)

In Quilling v. Trade Partners, Inc., 572 F.3d 293 (6th Cir. 2009), the Sixth Circuit Court of Appeals reaffirmed “the broad powers and wide discretion” of a trial court in distributing assets of a receivership, particularly emphasizing that “a pro rata basis [as contrasted with a “tracing” approach] is well supported….” 572 F.3d 298, 301 […]

Republic Bank of Chicago v. Lighthouse Management Group (Subject Matter Jurisdiction, Barton Doctrine/Princess Lida Doctrine/Colorado River Doctrine)

In Republic Bank of Chicago v. Lighthouse Management Group, 829 F.Supp.2d 766 (D.Minn 2010), the court addressed issues of subject matter jurisdiction in an action against property of a receivership, analyzing the Barton Doctrine, Princess Lida Doctrine, and Colorado River Doctrine, and dismissed the non-receivership action. The Barton Doctrine, a long-established common law rule created […]

Ritchie Capital Management LLC v. Jeffries (Stay of Litigation)

653 F.3d 755 (8th Cir. Sept. 6, 2011) Ritchie Capital Management LLC v. Jeffries is an important case because it shows the limits of a court’s power to enter stays of litigation in receiverships. An investor in a Ponzi scheme brought suit against two officers of receivership entities for common law and RICO fraud. Defendants […]

Rob Evans & Associates, LLC v. United States (Tax Refunds)

After the IRS denied payment of the hefty refund claimed on the income tax return a receiver filed on behalf of a Qualified Settlement Fund, the receiver brought an action against the United States to recover the funds. The receiver had claimed a refund for all monies paid in taxes by the receivership entities on […]

S.E.C. v. Stanford Int’l Bank, Ltd (Due Process Rights of Creditors)

In S.E.C. v. Stanford Int’l Bank, Ltd., 12-10822, 2014 WL 60143 (5th Cir. Jan. 8, 2014), the Fifth Circuit addressed the objections of an alleged secured party to a turn over order issued by the District Court in a receivership action. Pursuant to a previous ruling of the Fifth Circuit disallowing the issuer of a […]

SEC v. Albert Fase Kaleta, et al. (Receivership Court’s Equitable Powers)

Securities and Exchange Commission v. Albert Fase Kaleta, et al, 2013 WL 3030300 (C.A.5 (Tex)) (June, 19, 2013). This is an interlocutory appeal arising from receivership proceedings. The appellants are investors who were allegedly defrauded by receivership entities in violation of securities laws. Appellants challenged the district court’s approval of a negotiated settlement between the […]

SEC v. Byers (Distribution Plan)

SEC v. Byers is a good case to support the use of pooling funds and pro-rata distributions in receivership cases, where separate legal entities (Real Estate Funds and Commodity Funds) were part of a unified scheme to defraud. The Court approved use of the “net investor method” of determining investor claims for distribution purposes (generally […]

SEC v. Byers (Injunction Against Bankruptcy Filing/Stay of Proceeding Against Receivership Entities)

Re: Injunction Against Bankruptcy Filing/Stay of Proceeding Against Receivership Entities In the matter of SEC v. Byers, 2008 WL 5236644 (S.D.NY 2008), the Court addressed a motion by a group of creditors to modify certain language included in the order appointing a receiver for entities involved in a Ponzi scheme, which barred third parties from […]

SEC v. Capital Consultants LLC (Appeal of Distribution Plan)

The following case effects the rights of claimants in a distribution plan to file an appeal. – Phil Stenger SEC v. Capital Consultants LLC 453 F.3d 1166 (9th Cir. 2006) is a case of first impression in the Ninth Circuit, addressing the appealabillity of an order finally determining the rights of some, but not all, […]

SEC v. Enterprise Trust Company (Intervention Receivership)

Re: Intervention Receivership In the recent case SEC v. Enterprise Trust Company, 559 F.3d 649 (7th Cir. 2009), the 7th Circuit reversed its prior holding in SEC v. Wozniak, 33 F.3d 13 (7th Cir. 1994) that investors must intervene in an SEC action in order to appeal in a receivership proceeding. Now, the 7th Circuit […]

SEC v. Evolution Capital Advisors, LLC (Disgorgement)

S.E.C. v. Evolution Capital Advisors, LLC, H-11-2945, 2013 WL 5670835 (S.D. Tex. Oct. 16, 2013) In reviewing a request for disgorgement, the Court affirmed the broad discretion granted to award a sum that is a “reasonable approximation” of the profit the individual received from the scheme, as a remedy to ensure the parties responsible for […]

SEC v. Holt (Receiver Standing)

2007 WL 2332584 (USDC D.Ariz. August 13, 2007) SEC v. Holt, 2007 WL 2332584 (USDC D.Ariz. August 13, 2007) **2-3, reaffirms the principle that a receiver has standing to assert any rights against property that could be asserted by the receivership entity. This includes the right to sell property held by a trust placed in […]

SEC v. Ross, et al. (Nationwide Service/28 U.S.C. §754)

SEC v. Ross, et al. 504 F.3d 1130, 1139-1140 (9th Cir. 2007) SEC v. Ross, et al., 504 F.3d 1130, 1139-1140 (9th Cir. 2007) is an important case for receivers because the court affirms the use of 28 U.S.C. §754 and 28 U.S.C. §1692 to permit the appointing court to exercise nationwide jurisdiction as long […]

SEC v. T-Bar Resources LLC (Sale of Real Property)

2008 WL 4790987 (N.D.Tex., Oct 28, 2008) In this case the receiver failed to comply with the requirement for 3 appraisals in the “private sale” of real property under 28 U.S.C. § 2001(b) because there were not sufficient assets in the estate to conduct the appraisals and thus the court denied the motion to approve […]

Smith v. SEC (Joint Assets)

2011 WL 3437561 (2nd Cir. Aug. 8, 2011) (not yet published in F.3d) Smith v. SEC is a useful case because it supports a court’s equitable power to order the turnover and sale of assets that are jointly owned and the court’s authority to find that assets titled only in the name of a spouse […]

Standifer, Le, & Krell v. SEC (Barton Doctrine)

A series of opinions have recently been issued in the 11th Circuit reaffirming the Barton Doctrine which is the “general rule that before suit is brought against a receiver leave of the court by which he was appointed must be obtained.” Barton v. Barbour, 104 U.S. 126 (1881). Standifer v. SEC, 2008 WL 513352 (N.D.GA.2008), […]

Terry v. June (Recovery of Profits plus Principal Investment)

The following alert and the June case contain a helpful discussion on when it might be appropriate to seek the return of fictitious profits plus principal investment. – Phil Stenger In Terry v. June, 432 F.Supp.2d 635 (W.D.Va. 2006) (“June”), the District Court held that the admissions, and conviction of the scheme’s perpetrator, will establish […]

U.S. S.E.C. v. Quest Energy Mgmt. Grp., Inc. (Standing to Appeal)

U.S. S.E.C. v. Quest Energy Mgmt. Grp., Inc. 13-12778, 2014 WL 4783564 (11th Cir. Sept. 25, 2014)- The Eleventh Circuit dismissed an appeal of the appointment of a receiver for a company by its former officers for lack of jurisdiction, because the former officers were enjoined from taking any action on behalf of the company […]

U.S. Small Business Administration v. Integrated Environmental Solutions (Jurisdiction/28 U.S.C. §754)

U.S. Small Business Administration v. Integrated Environmental Solutions, Inc., 2006 WL 2336446 (S.D.Tex. 2006), continues the recent barrage of cases affirming the extraterritorial “in personam” jurisdiction of a Receivership Court, based upon the “interplay” of Sections 754 and 1692 of 28 U.S.C., without the need for any “minimum contacts” analysis. In addition, the Court confirmed […]

United States Commodity Futures Trading Commission v. Wilson, et al. (Distribution Plans—Rising Tide v. Net Loss Method)

U.S. Commodity Futures Trading Commission v. Wilson, 11-CV-1651-GPC-BLM, 2013 WL 3776902 (S.D. Cal. July 17, 2013)—In the distribution process, District Court showed preference for the rising tide method to determine claim amounts, where claimants keep distributions previously made to them, but the distributions are credited against their calculated pro rata share, dollar for dollar. Overruling […]

United States v. Antiques Ltd. Partnership (Jurisdiction over Appeals)

United States v. Antiques Ltd. Partnership, 760 F.3d 668 (7th Cir. 2014) The Seventh Circuit reviewed five separate appeals related to a receivership matter, finding that it only had jurisdiction over one of the appeals. Preliminarily, the Court held that appeals from a denial of a motion to reconsider the calculation of assessments and an […]

United States v. Coughlin (Receiver’s Cooperation in Criminal Proceedings)

United States v. Coughlin, 4:12-CR-166, 2013 WL 1506990 (E.D. Tex. Feb. 4, 2013) report and recommendation adopted, 4:12-CR-166, 2013 WL 1558110 (E.D. Tex. Apr. 10, 2013) (Receiver’s Cooperation in Criminal Proceedings) Relying on the reasoning of the Fifth Circuit in United States v. Setser, 568 F.3d 482, 487 (5th Cir. 2009), the District Court denied […]

USA v. Fairway Capital Corporation (Claims Processing)

Welcome to my first “Receivership Alert”. As new cases are decided that affect Receivers and Receiverships, I will alert you to those new developments and provide you with a copy of the case. What follows is the first Receivership Alert. – Phil Stenger U.S.A. v. Fairway Capital Corporation _____ F.Supp.2d _____, 2006 WL 1554593 (D.R.I., […]

USA v. Petters (Intervention/Lift of Stay)

Re: Intervention/Lift of Stay In USA v. Petters, 2008 WL 5234527 (D.MN 2008), three third parties requested that the District Court grant their motion to intervene in the action so that they could petition the Court for relief from the stay provisions in the order appointing the receiver, which stay enjoined litigation against receivership entities. […]

Warfield v. Alaniz (Standing/Status of Repose)

The following case touches on several important issues concerning receiverships. – Phil Stenger Warfield v. Alaniz 2006 2190563 (D.Ariz. August 1, 2006) an August, 2006 decision of the federal district court for the district of Arizona held: In an action for fraudulent transfer, the Receiver has standing to sue for injuries to the underlying receivership […]

Wiand v. Lee (Prejudgment Interest on Voided Transfers/Ponzi Presumption)

The Eleventh Circuit Court of Appeals overturned the district court’s denial of prejudgment interest on “false profits” that individuals received from entities involved in a Ponzi scheme would be required to return. While upholding the grant of summary judgment voiding the transfers under the Florida Uniform Fraudulent Transfer Act (FUFTA), the appellate court found that […]

Williamson v. PricewaterhouseCoopers LLP (In Pari Delicto Doctrine)

Williamson v. PricewaterhouseCoopers LLP, Index No. 602106/2004 (N.Y. Sup. Ct. November 14, 2007) is an important case for Receivers overcoming challenges based on the in pari delicto doctrine. The New York Supreme Court refused to apply the doctrine to a nonbankruptcy trustee who had sued the company’s auditors for failure to detect management fraud, where […]

Wing v. Buchanan (UFTA Statute of Limitations, Equitable Powers of the Receivership Court)

Vacating a District Court order granting summary disposition in favor of the Receiver, the Court ruled that the previous appointment of a bankruptcy trustee months before the receiver was appointed could trigger the start of the one year discovery period statute of limitations in Utah’s Uniform Fraudulent Transfer Act. Although the Court did apply adverse […]

Wing v. Dockstader (Standing under the UFTA, Statute of Limitations, Tax Offset in Judgment Computation)

2012 WL 2020666 In Wing v. Dockstader the Tenth Circuit follows the Seventh Circuit (Scholes v. Lehman, 56 F.3d 750 (7th Cir. 1995)) in holding that a receiver of an entity that was used to perpetrate a Ponzi scheme does have standing to bring actions under the Uniform Fraudulent Transfer Act as if it were […]

Wing v. Layton, et al. (Standing, Fraudulent Transfers)

Wing v. Layton, 2:08-CV-708, 2013 WL 3725267 (D. Utah July 12, 2013)—District Court followed the Scholes v. Lehmann, 56 F.3d 750 (7th Cir.1995) line of cases, finding that a receiver has standing to assert fraudulent conveyance claims to recover amounts transferred by the company during the course of a Ponzi scheme. Additionally, while Defendant had […]

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