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Ashmore v. Owens

United States District Court, D. South Carolina

November 17, 2017

Beattie B. Ashmore, in his capacity as court-appointed receiver for Ronnie Gene Wilson and Atlantic Bullion and Coin, Inc., Plaintiff,
v.
Brigitte Owens, Defendant.

          ORDER AND OPINION

         Plaintiff Beattie B. Ashmore (“Receiver”), in his capacity as court-appointed Receiver for Ronnie Gene Wilson (“Wilson”) and Atlantic Bullion and Coin, Inc. (“AB&C”), filed this action against Defendant Brigitte Owens (“Defendant”) to recover direct payments from the Wilson-AB&C Ponzi scheme.[1]

         This matter is before the court pursuant to Receiver and Defendant's competing Motions for Summary Judgment (ECF Nos. 51, 65.) For the reasons set forth below, Defendant's Motion for Summary Judgment is DENIED (ECF No. 51), and Receiver's Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART (ECF No. 65).

         I. PROCEDURAL BACKGROUND

         On July 30, 2012, Wilson and AB&C pled guilty to two counts of mail fraud stemming from their involvement in a criminal Ponzi scheme involving hundreds of victims and millions of dollars. (ECF No. 54 at 1.) On November 13, 2013, Wilson was sentenced to a 235-month term of imprisonment. (Id.) On that same date, AB&C was sentenced to a five year term of probation and a fine was imposed. (Id.) Wilson and AB&C were ordered to pay restitution in the amount of $57, 401, 009.00. (Id.) On August 12, 2014, Wilson was again indicted on one count of obstruction of justice related to his efforts to secrete assets from the Government and court-appointed Receiver. (Id.) On October 6, 2014, Wilson entered another guilty plea, and on December 10, 2014, was sentenced to an additional term of imprisonment. (Id. at 2.)

         As a result of the criminal investigation into the fraudulent investment scheme orchestrated by Wilson and AB&C, an Order was entered appointing Beattie B. Ashmore as the Receiver. See Wilson, 8:12-cr-00320-JMC (ECF No. 39.) The Order set forth the duties of the Receiver to include marshaling and safeguarding the assets of Wilson and AB&C and other so defined entities (hereinafter the “AB&C Receivership Entities”) in an effort to ultimately make a return to the victims of Wilson's criminal activities. (Id.) The Order requires the Receiver, among other things, to locate and manage assets previously acquired by and/or in the name/possession of the AB&C Receivership Entities. (Id.) In addition, the Order directs the Receiver to initiate legal proceedings for the benefit of the AB&C Receivership Entities including, but not limited to, suits for disgorgement of profits. (Id.)

         On June 11, 2015, Receiver filed a Complaint against Defendant for unjust enrichment and fraudulent transfer under the Statute of Elizabeth, SC Code Ann. 27-23-10 (2014), and/or the North Carolina Uniform Voidable Transactions Act, N.C. Gen. Stat. § 39-23.1, et seq. (2015) (“UVTA”).[2] (ECF No. 1.) Under both claims, Receiver seeks $255, 190.00 (the amount of “profit” Defendant received from her investment) from Defendant “for the ultimate benefit of distribution to the court-approved victims of the Ponzi scheme.” (ECF No. 1 at 7.) On April 14, 2017, Defendant filed a Motion for Summary Judgment, asserting: (1) Receiver lacks Article III standing; (2) prudential standing considerations likewise preclude the action; (3) Receiver lacks constitutional capacity to sue; (4) Receiver's appointment was invalid; (5) Receiver's South Carolina law claims fail because (a) Receiver has not shown inadequacy of relief at law, (b) the statute of limitations bars the stale claims, and (c) Receiver lacks statutory standing under the Statute of Elizabeth; (6) Receiver's North Carolina law claims fail under the UVTA; and (7) Receiver's unjust enrichment claim fails. (ECF No. 51.)

         On April 28, 2017, Receiver filed a response in opposition to Defendant's Motion, largely asserting that Defendant's procedural and substantive arguments were meritless. (ECF No. 54.) On May 4, 2017, Defendant filed a reply to Receiver's response, essentially reasserting her arguments in her Motion for Summary Judgment. (ECF No. 56.)

         On June 7, 2017, Receiver filed a Motion for Summary Judgment, asserting that there are no genuine issues of material fact as to Receiver's unjust enrichment claim and fraudulent transfer claim. (ECF No. 65.) On June 20, 2017, Defendant filed a response in opposition to Receiver's Motion, incorporating her arguments from her Motion for Summary Judgment, with the added argument that she acted in good faith. (ECF No. 69.) On June 30, 2017, Receiver filed a reply to Defendant's response, restating his belief that Defendant's arguments were meritless. (ECF No. 75.)

         II. FACTUAL BACKGROUND

         To effectuate the fraudulent investment scheme, Wilson, through other persons and his company, AB&C, conducted seminars to recruit individuals to invest in silver bullion with promises of unconventionally high rates of return. (ECF No. 65 at 2.) Defendant invested in and profited from this fraudulent investment scheme at the expense of those investors who lost part or all of their investment. (Id.) Defendant is considered a “net winner, ” meaning she received more money than she invested. (Id.) On May 10, 2006, Defendant's then-husband invested $40, 000 with AB&C on her behalf and without her advance knowledge.[3] (ECF No. 90 at 3.) Defendant's net profit from this scheme was $255, 190.00, a 723% return on her investment. (Id.)

         As part of the scheme, investors deposited monies, by cash, check, or wire, with Wilson/AB&C, but were not asked to or required to enter into a written agreement. (ECF No. 65-2 at 8.) In this case, Defendant never met with Wilson to discuss the investment made on her behalf. Further, Defendant was not required to provide a social security number, IRS W-9 form, driver's license, or personal information (e.g., annual income, net worth exclusive of home, liquid net worth, outstanding debt, tax bracket, number of dependents, occupation, investment experience). (Id. at 9; ECF No. 65-4 at 2.) Defendant admits in her deposition that no online access to her account was available. (ECF No. 65-2 at 6.) Additionally, she admits that she never received a trade confirmation and that no interest was earned on her money that Wilson held for her. (Id. at 7-8.)

         Defendant did not receive statements on a regular basis and admits in her deposition that she did not review her statements for accuracy. (Id. at 5, 11.) Although Wilson told Defendant that a commission would be charged, no commission ever appeared on a statement. (Id. at 7.) Defendant did not have control as to when Wilson bought and sold silver. (Id. at 10.) She never inquired whether Wilson/AB&C was licensed or registered to buy and sell silver bullion. (Id. at 7.) Defendant never received year-end tax reporting documents including, but not limited to 1099s. (ECF No. 65-2 at 9.) She did not report the profit from her investment on her federal tax returns and kept it from her accountant. (Id. at 9-10.)

         At one time, Wilson's statements indicated that Defendant owned 11, 800 ounces (weighing a half of a ton) of silver, but never paid any money to store the silver. (ECF No. 65 at 4.) She did not know where the silver was purportedly stored, never asked where the silver was purportedly stored, and never asked to take possession of the silver. (ECF No. 65-2 at 10.) Defendant even admitted that she did not know if Wilson was actually buying and selling silver on her behalf. (Id. at 7.)

         III. ...


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