OPINION OF THE COURT
In this action, filed under the Commodity Exchange Act and the securities laws of New Jersey and Florida, defendant Robert Maxwell appeals the district court’s orders granting summary judgment and ancillary relief in favor of plaintiffs, the Commodity Futures Trading Commission (“CFTC”) and the states of New Jersey and Florida. Specifically, Maxwell challenges the court’s decision to freeze his assets and its orders holding the defendants jointly and severally liable to disgorge ill-gotten gains in an amount equal to investor losses. Maxwell argues that the district court abused its discretion in fashioning such equitable relief ancillary to the permanent injunction it granted. Maxwell also appeals the district court’s reliance in granting summary judgment on factual findings that the court made as part of its preliminary injunction detеrmination. For the reasons set forth below, we will affirm the grant of summary judgment, but we will vacate the disgorgement orders and remand the case to the district court for further proceedings consistent with this opinion.
A.
The case has a complex factual and procedural history. The complaint, filed on June 30, 1987, alleged that American Metals Exchange Corporation (“AME”), Anglo Swiss Metals, Ltd., FC & M Investment Corp., and William Frank were engaging in the offer and sale of illegal off-exchange futures contracts and were defrauding the public in violation of provisions of the Commodity Exchange Act, as amended, (the “Act”), 7 U.S.C. §§ 1-24 (1988), and the securities laws of New Jersey and Florida.
The complaint alleged that from May 1986 to June 1987 the defendants sold an illegal, off-exchange investment prоgram through which 2000 investors purchased specific quantities of precious metals at prevailing market prices. The investment program, called the Equity Building Program (“EBP”), offered purchasers the chance to speculate on price changes in precious metals. EBP contract purchasers made a down payment toward the total price of their investment.
On July 2, 1987, two days after the filing of the complaint, the district court granted plaintiffs’ application for a preliminary injunction and an order freezing the assets of the defendants. The injunction prohibited the defendants from engaging in the commodity futures business. The court also designated a temporary equity receiver and appointed Arthur Young & Co. as accountant to the receiver.
Subsequently, on December 23, 1987, the plaintiffs filed an amended complaint which asserted additional counts under the Florida securities laws and named Robert Maxwell, Amalgamated Redemption Centers, Inc. (“ARC”), Trans World Metals Corporation, and Michael Jebrock as additional defendants. After a series of hearings, thе district court extended the preliminary injunction to Maxwell and the other new defendants. CFTC v. American Metals Exch. Corp.,
Defendant Maxwell retained new counsel and pursued two interlocutory appeals.
On March 12, 1990, the district court granted summary judgment in favor of the plaintiffs and against all the defendants on Count I of the amended complaint, which count asserted violations of Section 4(a) of the Act, as amended, 7 U.S.C. § 6(a) (1988).
Subsequently, on May 16,1991, after further briefing, discovery and oral argument, the district court granted summary judgment for the plaintiffs on Counts II through VIII of their amended complaint.
B.
The evidence shows that early in 1986, Bill Frank of Short Hills, New Jersey, and Michael Jebrock of Coral Springs, Florida, made plans to sell the Equity Building Program to the public. The program offered potential customers a deferred delivery investment in precious metals. Frank and Jebrock had previously sold other precious metal investments to the public. In search of capital, Frank introduced Jebrock to Robert Maxwell, the owner of a furniture business in New York. Frank had known Maxwell for over thirty-five years. Maxwell agreed to invest in the proposed business.
The defendants formed several corporations through which they conducted the business. Frank became president of defendant American Metals Exchange Corporation. Jebrock became president of and part owner of defendant Trans World Metals Corporation. AME, which maintained offices in Millburn, New Jersey, sold the EBP contracts to the public through defendants FC & M and Trans World Metals. FC & M occupied space in AME’s Millburn offices but used a different mailing address. Trans World Metals operated out of offices in Coral Gables, Florida. FC & M was owned by defendant Frank along with Steven Kramer, AME’s head trader, and Gordon Friedman. Anglo Swiss Metals, Ltd., a Panamanian corporation, was established to became the owner of AME.
Amalgamated Redemption Centers, Inc., was established as the primary liquidation agent which AME’s customers used to facilitate the delivery and sale of their metal positions. If a customer’s precious metals investment had appreciated, ARC would advance to AME the balance due on the EBP contract, arrange the sale of the preciоus metal, and draft a check for the customer. ARC was the only liquidation agent that AME recommended to its clients. For its services in helping EBP investors unwind their metal positions, ARC charged customers 2.5% of the contract’s value plus additional fees for handling the metals.
The record shows that AME and ARC did not physically transfer metals but prepared offsetting paperwork transactions. Substantially all of ARC’s receipts were funds transferred from AME. ARC operated out of offices in New York City leased from and shared with Maxwell's furniture companies. Robert Maxwell used the furniture companies’ attorneys to incorporate ARC. Maxwell was involved in ARC'S business and used his real name, Robert Lebovitch, to sign the checks ARC sent to customers who liquidated their contracts.
Sales of the Equity Building Program to the public began in May 1986. In April 1987, prices on the precious metals markets fluctuated widely, and customer liquidation demands increased. Because AME had not properly hedged to minimize risk, it could
Though ARC could not keep pace with a backlog of customer liquidation demands, AME through FC & M and Trans World Metals continued to sell EBP contracts to the public. AME then used incoming customer funds to pay off existing customers who desired to liquidate through ARC. Maxwell resigned from ARC on June 2, 1987, after attempting to sell the company to Carol Kahan, his assistant at ARC. The original complaint in this action was filed four weeks later, on Junе 30, 1987.
II. Merits
A.
Federal subject matter jurisdiction for this action lies under 7 U.S.C. §§ 13a-l and 13a-2. We have appellate jurisdiction pursuant to 28 U.S.C. § 1291.
Our scope of review of the district court’s granting of equitable relief, in determining the amount of disgorgement and the extent of the freeze of appellant’s assets, is for abuse of discretion. See McLendon v. Continental Can Co.,
B.
We will address first the propriety of the district court’s order that the defendants disgorge their unlawful profits in an amount equal to investor losses. Maxwell does not challenge the propriеty of disgorgement as an equitable remedy.
It is well recognized that a court may order the divestment of the benefits of unlawful activity. A number of courts have held that district courts have the power to order disgorgement as a remedy for violations of the Act for “the purpose of depriving the wrongdoer of his ill-gotten gains and deterring violations of the law.” CFTC v. British Am. Commodity Options Corp.,
In American Board of Trade, the Second Circuit held that, where defendants’ record keeping has “so obscured matters that lawful gains cannot be distinguished from the unlawful without incurring inordinate expense, it is well within the district court’s power to rule that the measurement of disgorgement will be the more readily mеasurable amount of losses incurred by the defendants’ customers in the unlawful transactions.” Id. at 1252.
Without holding a hearing, however, the district court here had no basis upon which to conclude that it would be inordinately difficult to measure unlawful profits.
In response, the plaintiffs contend that the accountant’s March 1988 report was not complete or final, that Maxwell interposed a host of procedural obstacles which prevented the receiver from making an accurate accounting of the benefits Maxwell received from the unlawful acts alleged in the amended complaint, and that Maxwell resolved these accounting questions only on the eve of the district court’s grant of partial summary judgment. The plaintiffs argue that it was Maxwell’s failure to come forward in a prompt fashion with the financial details of his involvement with AME and ARC that prompted the district court to compare this action to American Board of Trade and to impose the same punitive remedy ordered in that action.
Moreover, we agree with Maxwell that any relief ancillary to the injunction sought under the Act must be remedial and not punitive in nature. When used as a remedy, disgorgement of ill-gotten gains prevents those who violate the Commodity Exchange Act from profiting from their wrongs. On the other hand, an award of damages in the amount of investor losses may go beyond the scope of a Commodity Exchange Act enforcement proceeding. Absent a hearing to calculate ill-gotten gains, the disgorgement ordered in an amount equal to investor losses could be a penalty assessment. If investors wish to seek recovery of their losses as a remedy, they are free to do so in an independent civil action against defendants. The hardship of investor losses should not, however, be used as an excuse to impose a remedy under circumstances in which the scope of relief falls outside that remedy’s recognized parameters. We will remand the case to the district court for an evidentiary hearing to determine whether an appropriate evaluation can bе made of the unlawful profits Maxwell garnered from his involvement with AME and ARC.
On remand, the district court, in reconsidering disgorgement, should also keep in mind that any reliance on the decision in American Board of Trade, ordering disgorgement in the full amount of the investors’ losses, may present a problem in the present case which did not arise in American Board of Trade. There, the customers’ losses were less than one third of the CFTC’s “conservative” analysis of the defendants’ profits.
Until the amount of unjust enrichment has been established by a hearing, there will have been no showing of the relationship of all the defendants’ gains to investor losses. The reason why this relationship has to be established is because, as we have already noted, in designing remedies under the Commodity Exchange Act or the Securities Exchange Act, the courts have considered disgorgement to serve primarily to prevent unjust enrichment. For this reason a “court may exercise its equitable power only over the property causally re
In its ruling on disgorgement, the district court also held Maxwell, along with the other defendants, jointly and severally liable for the $15 million in customer losses. Because we are remanding this case for a hearing on the amount of disgorgement which Maxwell should be ordered to make, it is not necessary to consider the issue of joint and several liability at this time. Depending upon the outcome of the hearing, the district court can, when it makes a further order on disgorgement, make an appropriate ruling on the question of whether the defendants should be held to be jointly and severally liable for that disgorgement.
C.
The district court has alsо frozen all of Maxwell’s assets. Maxwell does not argue that the freeze is impermissible. Instead, he contends that the district court should have entered a partial freeze and not a total one. Maxwell urges that this Court’s precedents compel that any asset freeze be reasonably related to the likely size of the final judgment. See Hoxworth v. Blinder, Robinson & Co.,
Maxwell also objects to the district court’s decision to deny his request to pay his attorneys’ fees out of his frozen assets. He asserts that the court’s decision has rendered the freeze order especiаlly draconian. The award of fees in a receivership is entrusted to the discretion of the district court. SEC v. Capital Counsellors, Inc.,
While we recognize that Maxwell’s lawyers should be reimbursed for their efforts on his behalf, we do not find the district court’s failure to disturb the freeze order to be an abuse of discretion. First, plaintiffs have shown that Maxwell has had access to funds, not covered by the freeze, which he has used to pay some legal fees. Second, Maxwell has been slow to produce
D.
Finally, we must address Maxwell’s contention that the district court erroneously relied on its factual findings from the preliminary injunction hearing in granting summary judgment. The district court first granted summary judgment in favor of the plaintiffs and against all the defendants on Count I of the amended complaint. That count alleged that the defendants were engaged in the sale of illegal, off-exchange futures contracts in violation of the Act. After further discovery and briefing, the court granted summary judgment to the plaintiffs on Counts II through VIII of the amended complaint. These counts alleged various fraud and securities law violations under the Act, the New Jersey Uniform Securities Law and the Florida Investor Protection Act.
Maxwell contends that the district court relied extensively on its findings from the preliminary injunction hearing in granting the plaintiffs’ motions for summary judgment. He is willing to concede that the other defendants did commit the violations charged. He takes exception, however, to the district court’s conclusion that, because he controlled Anglo Swiss, AME, and ARC, he should be held liable along with the other defendants. He asserts that, in granting summary judgment against him, the district court improperly relied on factual determinations which it had made in granting the preliminary injunction. He also claims that in rejecting his depositiоn testimony and affidavits, the district court resolved essential credibility determinations in favor of the plaintiffs’ witnesses. On this point, Maxwell declares that his own affidavits and testimony created genuine factual disputes sufficient to defeat the plaintiffs’ motions for summary judgment. For these reasons, Maxwell urges this court to reverse the orders granting summary judgment and remand the action for a full trial on the merits.
Plaintiffs, on the other hand, claim that summary judgment was entirely proper because the facts are so one-sided that a trier of fact could not reasonably have found against the moving party. Moreover, the plaintiffs assert that Maxwell's affidavit in opposition to summary judgment amounts to no more than a conclusory denial of liability and does not create a genuine dispute of material fact.
This court has plenary power to determine whether the district court properly concluded that no genuine issues of material fact remained for trial and that the plaintiffs were entitled to judgment as a matter of law. See Little v. MGIC Indem. Corp.,
The district court did refer on occasion to its findings in its preliminary injunction opinion to support its summary judgment determination. For example, in granting summary judgment against Maxwell on Count III of the amended complaint, which asserted that the EBP constituted the offer
Maxwell also points to the district court’s reliance on evidence submitted at the preliminary injunction hearing and the testimony of Michael Jebrock in concluding that Maxwell controlled AME. On Count II of the amended complaint, the court held that Maxwell’s control of Anglo-Swiss, AME, and ARC established the necessary scienter to find Maxwell liable under section 4b(A) of the Act, which makes it unlawful for any person to deceive or defraud any other person in connection with making a contract for the sale of any commodity for future delivery. Maxwell contends that in making this determination, the district court improperly weighed the evidence rather than recognizing the genuine issues of fact which Maxwell raised. Maxwell argues further that the court weighed the credibility of the deponents and found Je-brock’s testimony more credible than Maxwell’s.
Yet, even without relying on Jebrock’s testimony, the court had a large amount of other uncontradicted evidence on which to rest its determination. This evidence included the statements of Carol Kahan, Maxwell’s assistant at Amalgamated, that Maxwell required her to contact AME on a daily basis regarding the closing prices on the metals market, AME’s sales figures, the value of the contracts sold, and the amount of monies AME received from investors. Moreover, the record shows Maxwell received substantial, documented loans from AME out of funds that should have been invested for the purchase of metals. Maxwell also wrote a letter to Bill Frank in which he stated that all memos to AME were to be sent in draft form to Maxwell’s office for approval.
Moreover, even if we were to conclude that the district court improperly included credibility determinations, made in connection with the preliminary injunction hearing, in its granting of summary judgment, we can still affirm the district court’s decision if the record nevertheless demonstrates the absence of any genuine issue of material fact. Country Floors,
In addressing the summary judgment arguments, it is important to note that Maxwell pled guilty to one count of violating New Jersey law by selling an unregistered security and pled no contest to two violations of Florida law. When he entered his guilty plea in the New Jersey Superior Court, he admitted his involvement with AME and EBP:
I was involved as an active investor in American Metals Exchange which sold investment contracts and precious metals; it was known as the Equity Building Program. I was aware that American Metals Exchange sold the program in New Jersey into June of 1987 from May of 1986. I was aware that the program was not registered with the State of New Jersey. I was aware that several other states had ordered cease and desist or-*82 deis against the Equity Building Program alleging violations of their Blue Sky laws. I also knew that American Metals Exchange had a direct relationship with Amalgamated Redemption Center, and I do not dispute the State's position that the Equity Building Program was a security.
Joint Appendix at 1436-37.
His guilty plea in New Jersey contradicts Maxwell’s conclusory denials of any participation in AME, of any involvement in the offer and sale of thе EBP, and of any appreciation of the relationship between AME and ARC. Moreover, in his affidavits Maxwell does not dispute the majority of the facts detailed in the statements of Wal-lach, Jebrock, Kahan, and Frank. When the admissions made at the plea colloquy are viewed together with the other uncontested evidence in the record, there is sufficient uncontroverted evidence to affirm the grant of summary judgment on all counts.
III.
For the above reasons, we will affirm the orders of the district court granting the motions for summary judgment, we will vacate the orders holding the defendants jointly and severally liable to disgorge ill-gotten gains in an amount equal to investor losses, and we will remand the case to the district court for further proceedings consistent with this opinion.
Notes
. Only one-half of this thirty percent down payment, or fifteen percent of the total purchase price, went toward the purchase of the metals futures. The other fifteen percent constituted an administrative fee.
. The four defendants named in the original complaint consented to the preliminary injunction.
. The court’s determination that the plaintiffs had demonstrated likely success on the merits with respect to their claims for past and future violations of the Commodity Exchange Act was a sufficient basis for issuing the injunctive and equitable relief and did not require the court to consider the likelihood of plaintiffs' success in proving the alleged violations of the securities laws of New Jersey and Florida. Under section 6c of the Act, as amended, 7 U.S.C. § 13a-l, injunctive relief may issue upon a showing that the defendants "engaged in, [are] engaging in, ór [are] about to engage in any act or practice constituting a violation of any provision of the Act.” The plaintiff also needed to show that the defendants were still in business so that there was a likelihood that violations would continue. See CFTC v. American Bd. of Trade,
. Maxwell also moved for the district court to stay the asset freeze pending appeal. By a bench ruling dated October 12, 1988, the district court denied his motion.
. As a condition of this plea, Maxwell testified in criminal cases against Bill Frank and Michael Jebrock in Florida.
. Section 4(a) requires that persons offering to conduct or conducting business in the United States which involves a contract for a purchase or sale of a commodity for future delivery must be a member of a board of trade which has been designated by the CFTC as a "contract market.” None of the corporate defendants were members of a CFTC designated contract market. The district court had determined previously that the EBP, the precious metals investment program which the defendants were selling, was a commodities futures contract. See
.These counts alleged violations of and sought injunctive and ancillary relief and a permanent injunction against all defendants under the Act, the New Jersey Uniform Sеcurities Law, N.J.S.A. 49:3-50, et seq. (1989), and the Florida Securities and Investor Protection Act, Fia.Stat. Ann. § 517.101 et seq. (1991).
Specifically, the plaintiffs alleged that the defendants committed fraud in connection with the sale of commodities for future delivery in violation of § 4b(a) of the Act, as amended, 7 U.S.C. § 6b(a) (1988) (Count II); that the EBP constituted the offer and sale of unregistered securities in New Jersey in violation of N.J.S.A. 49:3-60 (Count III); that the defendants failed to register as broker dealers in New Jersey in violation of N.J.S.A. 49:3-56 (Count IV); that the defendants committed fraud in connection with the sale of "securities” in violation of N.J.S.A. 49:3-52 (Count V); that the defendants committed fraud in connection with the sale of "investments" in violation of Fia.Stat. §§ 517.-301(1) and 517.312(l)(a) (Count VI); that the defendants sold the EBP in Florida through a "boiler room” in violation of Fia.Stat. § 517.-312(1) (Count VI); and that the defendants violated the Act in violation of Fia.Stat. § 517.275 (Count VIII).
. Defendant Bill Frank was the President and a director of Anglo-Swiss. Frank owned a 19% interest in the corporation together with his partners from FC & M. Defendant Michael Jebrock and a Mr. Michael Wallach jointly owned 10% of Anglo-Swiss and had the right to purchase another 10% of the corporation from shares held as treasury stock. Jebrock was the First Vice-President and a director of Anglo-Swiss. Maxwell held a 25.01% interest in Anglo-Swiss. Jack Gold, one of Maxwell's business partners also owned a 25.01% interest. Gerald Edson, who was not a party to this action, owned 9.98% of the shares. The Anglo-Swiss shareholders agreement, dated June 1986, showed that Maxwell, Gold, and Edson served as outside or non-officer directors to the corporation.
. Before its usе in the Commodity Exchange Act context, disgorgement was used as an equitable remedy in injunctive actions brought under the Securities Exchange Act. Section 27 of the Securities Exchange Act grants the courts equitable powers to enforce that Act. Though the Commodity Exchange Act has no provision similar to section 27, courts have found support for disgorgement in CFTC actions by relying on the general equity power of the federal courts. Moreover, the rationale supporting disgorgement in actions under the securities laws — that allowing a violator to retain the profits from his violations would frustrate the purposes of the regulatory scheme, see e.g., SEC v. Texas Gulf Sulphur Co.,
. Appellant argues that the measure of disgorgement should be unlawful "profits.” Appel-lees argue that the measure should be unlawful "proceeds.” The term most frequently used in reported decisions appears to be “profits." See, e.g., CFTC v. American Bd. of Trade,
. The accountant’s report concludes that Maxwell's illegal gains from AME’s operations were $797,402, far less than the $15 million the court ordered disgorged. The accountants’ report also indicates that Maxwell paid $729,304 to AME. The parties dispute the meaning of these payments. Plaintiffs insist that these funds were repayments for monies lent to Maxwell. Maxwell asserts that the funds he paid into the business represent a capital infusion which the сompany needed to pay its debts to customers and that his maximum gain from the operations was at most the disputed $797,402 figure or, taking into account his payments to AME, $797,-402 less $729,304 or $68,098.
. The appellees also argue that, even if Maxwell were not held liable to disgorge the investors’ losses, he could still be held liable as a controlling person under § 13(b) of the Act, as amended, 7 U.S.C. § 13c(b), for the investors’ losses caused by other defendants he controlled directly or indirectly. This issue was not raised in the district court and we will not consider it on this appeal. See United States v. Lowell,
. The CFTC argues that the defendants have not contested the amount of investor losses. This is true, but the amount of investor losses is a different issue than the amount of the defendants’ unjust enrichment.
. See note 7 supra.
. Defendant Michael Jebrock testified that Maxwell controlled AME and that all management, accounting, and legal decisions pertaining to AME were supposed to be made in Maxwell’s offices.