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Secure Leverage Group, Inc. v. Ira Bodenstein
16-3424
| 7th Cir. | Aug 8, 2017
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Case Information

*2 Before W OOD , Chief Judge , R IPPLE R OVNER , Circuit Judges .

R OVNER Circuit Judge.

This appeal from judgments entered by affirmed by court, favor defendant Ira Bodenstein, the Chapter trustee estate Peregrine Financial Group (“Peregrine”). Peregrine registered futures commissions merchant (FCM) registered dealer member the *3 16 3424, 16 National Futures Association. In addition to futures, Peregrine dealt in retail foreign currency transactions (“retail forex”) and spot metal transactions. The plaintiffs are investors who executed retail forex and spot metal contracts with Peregrine.

This appeal arose out of a series of events which culminated in Peregrine’s bankruptcy filing. In July the Commodity Futures Trading Commission notified Russell L. Wasendorf, Peregrine’s Chief Executive Officer and the Chairman the Board, that Peregrine’s accounts were going to be electronically monitored. Wasendorf attempted suicide next day, after penning a statement admitting to embezzling millions dollars over a year period. He was subsequently arrested, in September pled guilty to four criminal charges, including admitting that he embezzled misappropriated nearly $200 million from Peregrine’s segregated customer futures accounts.

As result that loss, Peregrine filed for bankruptcy, and Bodenstein appointed as trustee. Subchapter IV of Chapter Bankruptcy Code, U.S.C. §§ 761–767 governs futures commissions merchant such as Peregrine, provides distribution of “customer property” in priority all other claims. “Customer property” is defined as including funds received in connection with commodity contract, C.F.R. § 190.08(a)(1)(i)(A), which turn defined in § 761(4) Bankruptcy Code. Bodenstein excluded plaintiffs, Secured Leverage Group, al., that priority distribution based on his determina ‐ tion that spot metal transactions did not constitute “commodity contracts” so defined. Secured Leverage plaintiffs then filed an adversary complaint against Bodenstein, *4 3425 challenging that decision. After that adversary proceeding was terminated, another group of customers including Robert Miller and others (the “Miller plaintiffs), filed a class action adversary proceeding against Bodenstein, alleging fraud, breach of fiduciary duty, unjust enrichment, and conversion, and seeking the imposition of a constructive trust. As that claim was filed two years after the bar date proofs claim, and involved claims based on facts unrelated to the timely filed contract based claims, the bankruptcy court dismissed the action as untimely.

On appeal, the plaintiffs in this action chal ‐ lenge the decisions the bankruptcy court and the district court. The Secured Leverage plaintiffs assert that: their funds were held in a resulting trust and therefore were not included in the bankruptcy estate; the and spot metal contracts constituted commodity contracts under the similar contracts clause, U.S.C. § 761(4)(F)(i); and the court erred in precluding the expert testimony Martin Doyle. Miller plaintiffs allege: that the courts erred in holding that the Miller plaintiffs’ claim untimely and did not constitute an amended claim; that constructive trust proper remedy.

In thorough well reasoned opinion, district court properly resolved all those challenges, nothing that is argued in briefs to this court leads us to disagree with the district court’s analysis. Because we agree with reasoning conclusions district as all issues raised on appeal, we hereby adopt court’s opinion set forth at Secure Leverage Grp., Inc. v. Bodenstein B.R. (N.D. Ill. 2016) our own this appeal. *5 decision both appeals is

AFFIRMED.

Case Details

Case Name: Secure Leverage Group, Inc. v. Ira Bodenstein
Court Name: Court of Appeals for the Seventh Circuit
Date Published: Aug 8, 2017
Docket Number: 16-3424
Court Abbreviation: 7th Cir.
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