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 Nat. Bank, 657 F.2d 816 (6th Cir. 1981), the Court explained that so long as a receiver has made the appropriate filing in accordance with § 754, that the service of the summons on a defendant establishes a court’s jurisdiction pursuant to § 1692. Additionally, the Court adopted a broad definition of “Ponzi scheme” in determining that the Ponzi presumption applied to the fraudulent transfer claims. The Court clarified: “The hallmark of a Ponzi scheme is that the entity gives the false appearance of profitability by seeking investments by new sources rather than earning profits from assets already invested.” With this in mind, the Court characterized the arrangement at issue as such a scheme, although it was “cloaked by purportedly legitimate activities.”