Ashmore v. Fowler
| Decision Date | 02 August 2016 |
| Docket Number | Civil Action No. 8:14-cv-04449-JMC |
| Court | U.S. District Court — District of South Carolina |
| Parties | Beattie B. Ashmore, In His Capacity as Court-Appointed Receiver for Ronnie Gene Wilson and Atlantic Bullion and Coin, Inc., Plaintiff, v. William R. Fowler and Colleen Fowler, Defendants. |
Plaintiff Beattie B. Ashmore ("Plaintiff"), in his capacity as court-appointed receiver for Ronnie Gene Wilson ("Wilson") and Atlantic Bullion and Coin, Inc. ("AB&C"), filed the instant action against Defendants William R. Fowler and Colleen Fowler (together "Defendants") to recover grossly excessive payments received by Defendants as a return on their investment in the Wilson-AB&C Ponzi scheme.1 (ECF No. 1.)
This matter is before the court pursuant to Plaintiff and Defendants' Cross-Motions for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. (ECF Nos. 16, 17.) For the reasons set forth below, the court DENIES IN PART AND GRANTS IN PART Plaintiff's Motion for Summary Judgment and DENIES Defendants' Motion for Summary Judgment.
On the recommendation of his financial advisor, Ed Atwell, William Fowler made an initial investment of $122,582.93 in the Wilson-AB&C Ponzi scheme on or about December 14, 2006. (ECF Nos. 16-1 at 7:1-5, 16-4 at 3, 17-2 at 24:7-13 & 17-3 at 2.) The money was transferred by check to AB&C from a cashed out annuity held by The Hartford in William Fowler's name. (ECF No. 17-3 at 2.) Subsequently, on December 1, 2008, William Fowler made an additional investment in the Wilson-AB&C Ponzi scheme of $49,680.00 for a total investment of $172,262.93. (ECF Nos. 16-4 at 3 & 17-5 at 11.) The money for the second investment came from William Fowler's retirement account and was transferred using a check drawn on an account jointly owned by Defendants. (ECF No. 17-5 at 11.)
From October 29, 2007, until February 17, 2012, William Fowler made a total of 10 withdrawals from the Wilson-AB&C Ponzi scheme in the amount of $596,124.93. (ECF No. 16-4 at 3.) Defendants used funds obtained from the Wilson-AB&C Ponzi scheme to buy a house in both their names, tithe to their church, pay off their car and their doctors' bills, and build a pool for their personal use. (ECF No. 19-1 at 5:158:8-161:20.) To possess an account allowing access to the Wilson-AB&C Ponzi scheme, William Fowler did not sign any service agreements or provide a social security number or a driver's license. (ECF No. 16-1 at 13:17-25.) William Fowler was also not provided regular monthly, quarterly, or year-end statements from the Wilson-AB&C Ponzi scheme. (Id. at 12:1-6.) Moreover, William Fowler never received Form 1099s or any other kind of tax document from Wilson-AB&C. (Id. at 3:7-19.)
The court appointed Plaintiff Receiver in In Re: Receiver for Ronnie Gene Wilson and Atlantic Bullion & Coin, Inc., C/A No. 8:12-cv-02078-JMC, ECF No. 1 (D.S.C. July 25, 2012), a case related to the instant matter. Since he was tasked with "locating, managing, recouping,and distributing the assets of the Wilson-AB&C investment scheme," Plaintiff commenced the instant action against Defendants on November 18, 2014, asserting claims for fraudulent transfer (in violation of the Statute of Elizabeth, S.C. Code Ann. § 27-23-10 (2014)) and unjust enrichment. (ECF No. 1 at 1 ¶ 1 & 6 ¶ 38-7 ¶ 52.) On January 22, 2015, Defendants answered the Complaint. (ECF No. 6.) Thereafter, on November 3, 2015, the parties filed their respective Motions for Summary Judgment (ECF Nos. 16, 17), to which opposition was filed as to each Motion on November 20, 2015. (ECF Nos. 19, 20.)
On January 19, 2016, the court held a hearing on the pending Motions. (ECF No. 31.)
The court has jurisdiction over this matter under 28 U.S.C. § 1331 pursuant to Plaintiff's allegation that the Complaint "is so related to the In Re Receiver, 8:12-CV-2078-JMC case and the underlying criminal case, United States v. Wilson, et al, 8:12-cr-00320[,]" cases in which the court has jurisdiction, "that it forms part of the underlying case or controversy." (ECF No. 1 at 1 ¶ 3.) The court may properly hear Plaintiff's state law claims for fraudulent transfer and unjust enrichment based on supplemental jurisdiction since these claims "are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy . . . ." 28 U.S.C. § 1367(a).
Summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if proof of its existence or non-existence would affect the disposition of the case under the applicable law. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248-49 (1986). A genuine question of material fact exists where, after reviewing the record as awhole, the court finds that a reasonable jury could return a verdict for the nonmoving party. Newport News Holdings Corp. v. Virtual City Vision, 650 F.3d 423, 434 (4th Cir. 2011).
In ruling on a motion for summary judgment, a court must view the evidence in the light most favorable to the non-moving party. Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 123-24 (4th Cir. 1990). The non-moving party may not oppose a motion for summary judgment with mere allegations or denial of the movant's pleading, but instead must "set forth specific facts" demonstrating a genuine issue for trial. Fed. R. Civ. P. 56(e); see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986); Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir. 1991). All that is required is that "sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial." Anderson, 477 U.S. at 249. "Mere unsupported speculation . . . is not enough to defeat a summary judgment motion." Ennis v. Nat'l Ass'n of Bus. & Educ. Radio, Inc., 53 F.3d 55, 62 (4th Cir. 1995).
"When considering motions from both parties for summary judgment, the court applies the same standard of review and so may not resolve genuine issues of material fact." Monumental Paving & Excavating, Inc. v. Pa. Mfrs.' Ass'n Ins. Co., 176 F.3d 794, 797 (4th Cir. 1999) (citation omitted). "Instead, . . . [the court] consider[s] and rule[s] upon each party's motion separately and determine[s] whether summary judgment is appropriate as to each under the Rule 56 standard." Id. (citation omitted).
Plaintiff moves for summary judgment asserting that there are no issues of material factregarding his claims against Defendants for fraudulent transfer under the Statute of Elizabeth and for unjust enrichment. (ECF No. 16 at 8.) Specifically, Plaintiff asserts that he is entitled to set aside fraudulent transfers from the Wilson-AB&C Ponzi scheme to Defendants pursuant to the Statute of Elizabeth because (1) the existence of a Ponzi scheme establishes the actual intent of the Wilson-AB&C Ponzi scheme to defraud; (2) the Wilson-AB&C Ponzi scheme was indebted at the time of the transfers to Defendants; and (3) the Wilson-AB&C Ponzi scheme's intent to defraud is imputable to Defendants. (Id. at 9-12.) As to his claim for unjust enrichment, Plaintiff asserts that (1) Defendants received a benefit of $596,124.93 from the Wilson-AB&C Ponzi scheme after depositing only $172,262.93 resulting in a profit of $423,862.00; (2) Defendants realized the benefit as they used the excess monies for their own purposes; and (3) "it is inequitable for Defendants to retain the profit as the monies were obtained by fraud and injured both the Receivership Entities and other investors who lost money as a result of the fraud." (Id. at 12-13.) As a result of the foregoing, Plaintiff asks the court to grant summary judgment on all claims set forth in the Complaint.
Defendants oppose Plaintiff's Motion for Summary Judgment arguing that Colleen Fowler "is not liable for the debts or liabilities of her husband." (ECF No. 20 at 1.) They further argue that Colleen Fowler is not liable as alleged because she "did not invest her money with AB[&]C, did not have an account with AB[&]C, and never received a transfer or withdrawal from AB[&]C." (Id. at 3.) Defendants next argue that there is a question of fact regarding whether Wilson-AB&C's intent to defraud is imputable to William Fowler based on his lack of investment knowledge and experience. (Id. at 4-6.) Moreover, because the Receiver stands in the shoes of the corporation and not the losing investors in a Ponzi scheme, Defendants argue that Plaintiff is not entitled to summary judgment on his equitable claims since AB&C hasunclean hands "and the weight of the equities favor the Fowlers." (Id. at 7-8.)
Plaintiff contends that he is entitled to summary judgment because the transfers made by the Wilson-AB&C Ponzi scheme to William Fowler were fraudulent conveyances in violation of the Statute of Elizabeth. The Statute of Elizabeth provides that "[e]very gift, grant, alienation, bargain, transfer, . . . made to or for any intent or purpose to delay, hinder, or defraud creditors and others . . . must be deemed and taken . . . to be clearly and utterly void . . . ." S.C. Code Ann. § 27-23-10(A) (2016). To set aside a transfer like the ones at issue in this matter, Plaintiff must establish that (1) the transfer was made by the Wilson-AB&C Ponzi scheme with the actual intent of defrauding its creditors; (2) the Wilson-AB&C Ponzi scheme was indebted at the time of the transfer; and (3) the Wilson-AB&C Ponzi scheme's intent is imputable to Defendants. Durham v. Blackard, 438 S.E.2d 259, 262 (S.C. Ct. App. 1993) (citations omitted). "A clear and convincing evidentiary standard...
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