919 F. Supp. 2d 1319
M.D. Fla.2013Background
- Receiver seeks clawback of Cloud’s false profits from Nadel’s ponzi scheme; Cloud’s distributions totaled $6,557,370.62 vs $5,793,830.79 invested, yielding $763,539.83 in false profits.
- Court adopts R&R finding Nadel operated the funds as a ponzi scheme by the time Cloud received first distribution in June 2005.
- FUFTA and unjust enrichment theories govern the Receiver’s claims; the court focuses on whether transfers to Cloud were fraudulent payments.
- Nadel pled guilty and was sentenced; restitution ($174,930,311.07) and $162 million forfeiture were ordered; Nadel later died (2012).
- New evidentiary materials (criminal judgment, restitution, sentencing, and forensics by Maria Yip) support summary judgment; Nadel’s death allows admissibility under Rule 804(a)/(b).
- Court grants summary judgment for Receiver on liability and denies prejudgment interest as improper equity-based relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Nadel operated a ponzi scheme at time of Cloud transfers. | Receiver: ponzi scheme existed by relevant transfers. | Cloud: insufficient to prove scheme at time of transfers. | Yes; scheme operative by transfer dates (June 2005 onward). |
| Whether Cloud’s receipt of false profits is recoverable under FUFTA. | Receiver: transfers constitute fraudulent transfers under FUFTA. | Cloud: defenses such as mitigation/set-off apply. | Recoverable; false profits avoidable under FUFTA. |
| Whether prejudgment interest should be awarded. | Receiver: interest appropriate under equity. | Equitable considerations mitigate/deny. | Denied; prejudgment interest not warranted. |
| Whether statute of limitations precludes recovery. | Claims timely from Receiver’s January 2009 appointment. | Some transfers barred by limitations or other doctrines. | Not barred; discovery and appointment tolling applied. |
| Whether Cloud is a good-faith transferee or set-off defense applies. | Nadel’s transfers were fraudulent; no good-faith defense. | Potential good-faith purchaser arguments and set-off. | No good-faith defense; FUFTA avoids false profits. |
Key Cases Cited
- Donell v. Kowell, 533 F.3d 762 (9th Cir. 2008) (ratable distribution; false profits avoidable under FUFTA)
- In re United Energy Corp., 944 F.2d 589 (9th Cir. 1991) (fraudulent transfers; ponzi scheme context)
- Scholes v. Lehmann, 56 F.3d 750 (7th Cir. 1995) (admissibility of plea admissions; reliability in fraud context)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment standard; no genuine issue of material fact)
- Wise v. United States, 881 F.2d 970 (11th Cir. 1989) (presentence loss calculations; evidence necessity)