Cobalt Multifamily Investors I, LLC v. Arden
2014 U.S. Dist. LEXIS 130165
| S.D.N.Y. | 2014Background
- Receiver for Cobalt sued sales employees, including Defendant, for commissions received during a Ponzi-like securities fraud regime.
- SEC enforcement action (March 2006) alleged Cobalt principals issued false private placement materials and cold-called investors to raise funds.
- Receiver asserts three causes of action: Section 12(a)(1) violation (unregistered securities), fraudulent transfers, and unjust enrichment.
- Defendant moved for judgment on the pleadings under Rule 12(c), challenging standing and related defenses.
- Court holds Receiver lacks standing to pursue Section 12 claim, but finds the fraudulent transfer and unjust enrichment claims may proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to bring Section 12 claim | Receiver has broad authority to benefit investors | Receiver cannot sue for claims belonging to non-receivership investors | Receiver lacks standing; first claim dismissed |
| In pari delicto and Wagoner applicability | Receiver may recover transfers for creditors of the receivership entities | Wagoner bars recovery by the corporation against third parties | Neither in pari delicto nor Wagoner bars the Receiver's claims |
| Law-of-the-case applicability | Prior rulings control the current issues | Law-of-the-case not binding on new-party issues | Law-of-the-case not controlling; merits addressed on the record |
Key Cases Cited
- Eberhard v. Marcu, 530 F.3d 122 (2d Cir.2008) (defines receiver authority and standing limits in Ponzi-recovery context)
- Scholes v. Lehmann, 56 F.3d 750 (7th Cir.1995) (receiver standing to recover coerced corporate funds in Ponzi schemes)
- Robert L. Williamson v. Stallone, 905 N.Y.S.2d 740 (N.Y. Sup. Ct. 2010) (trustee can recoup overpayments for investors; distinction from auditor negligence)