United States v. Wolas, Criminal Action No. 17-10198-FDS

CourtUnited States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
Writing for the CourtSAYLOR, C.J.
Citation520 F.Supp.3d 114
Parties UNITED STATES of America v. Scott J. WOLAS, Defendant. Cecily Sturge, Petitioner.
Decision Date16 February 2021
Docket NumberCriminal Action No. 17-10198-FDS

520 F.Supp.3d 114

UNITED STATES of America
v.
Scott J. WOLAS, Defendant.


Cecily Sturge, Petitioner.

Criminal Action No. 17-10198-FDS

United States District Court, D. Massachusetts.

Signed February 16, 2021


520 F.Supp.3d 118

Sandra S. Bower, Assistant US Attorney, Carol E. Head, Assistant US Attorney, United States Attorney's Office, Boston, MA, for United States of America.

MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

SAYLOR, C.J.

This is an ancillary proceeding brought by petitioner Cecily Sturge pursuant to 21 U.S.C. § 853(n)(2) to determine the validity of her interest in a retirement account ordered forfeited to the United States.

Scott Wolas is a former partner in the New York office of a major law firm. In the mid-1990s, he participated in a pyramid scheme that bilked investors of more than $100 million. In 1996, the scheme collapsed, and he became a fugitive. While a fugitive, and using an assumed name, he perpetrated a second fraudulent scheme in Massachusetts between 2014 and 2016. Eventually, in April 2017, after more than twenty years on the run, he was arrested and charged in this court in connection with the second scheme. On June 29, 2018, he pleaded guilty to seven counts of wire fraud and one count each of aggravated identity theft, misuse of a social security number, and tax evasion.

When Wolas became a fugitive, he left behind a wife, Cecily Sturge, and a son. Sturge and her son had sporadic communications with Wolas while he was a fugitive. She eventually obtained a divorce in Florida, where she had moved, in 2001. In 2011, a different Florida court declared Wolas dead, even though he was alive and indeed in contact with his family.

Wolas also left behind a retirement account at the law firm that is now worth more than $700,000. That asset was not brought to the attention of the Florida divorce court, and therefore was not addressed in the divorce decree. There is substantial evidence that Sturge was aware of the existence of the asset at the time of the divorce, and in fact had twice contacted the law firm about transferring it to her, although her efforts were not successful.

By 2016, Wolas and Sturge were in regular contact, both by telephone and in person. Wolas devised a plan to petition the Florida court for a Qualified Domestic Relations Order ("QDRO") transferring the retirement account to Sturge. The petition and accompanying affidavit stated, among other things, that Sturge did not know Wolas's whereabouts, which was untrue; in fact, he physically accompanied her when she signed the affidavit before a notary public.

The Florida court had not yet acted on the petition when Wolas was arrested in April 2017. Wolas and Sturge continued to discuss the transfer of the retirement account over jail telephones. Eventually, in May 2017, the court issued the QDRO transferring the retirement account to Sturge.

In June 2017, at the request of the government, this Court entered a restraining

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order preventing the transfer of the assets. In November 2018, the Court entered a preliminary order of forfeiture ordering that the retirement account be forfeited to the United States. Sturge now challenges that forfeiture, contending that she has a valid interest in the retirement account that is superior to that of the United States.

After a period of discovery, both parties have moved for summary judgment. In substance, the government contends that the Court should issue a final order of forfeiture because the transfer of the retirement account to Sturge was a fraudulent transfer, and therefore voidable under the Florida Uniform Fraudulent Transfer Act. Sturge contends that the transfer was not fraudulent, among other reasons because it took place before the government had an interest in the account.

For the reasons stated below, the government's motion for summary judgment will be granted, and the petitioner's motion for summary judgment will be denied.

I. Background

A. Factual Background

The following facts are undisputed except as otherwise noted.

1. The Creation of the Retirement Account

Scott Wolas and Cecily Sturge were married on October 12, 1982. (Ex. 7, ¶ 2).1 They have one son from the marriage, Tyler Wolas. (Ex. 2 ("Sturge Dep.") at 11-12).

From 1989 to 1995, Wolas was a partner in the New York office of the law firm formerly known as Hunton & Williams LLP. (Ex. 3 ("Weisiger Dep.") at 20).2 While at Hunton & Williams, he participated in the Hunton & Williams Retirement Savings Plan (the "Retirement Plan") by making contributions to a retirement account (the "Retirement Account"). (Id. at 14-15, 16, 18). His interest in the Retirement Account vested in approximately 1994. (Id. at 35, 36).

Wolas designated Sturge as the primary beneficiary on the Retirement Account. (Ex. 1 ("Wolas Dep.") at 9-10).3 Sturge was not a participant herself and did not make any contributions to the account. (Weisiger Dep. at 31, 32).

During their marriage, Wolas and Sturge lived together in Westchester County, New York. (Sturge Dep. at 10). Sturge moved to Boca Raton, Florida, in approximately 1989. (Id. at 11, 13). She and Wolas began living separately at about that time. (Id. at 11, 12). She knew that he continued to work at the law firm after their separation. (Id. at 11, 54).

The funds in the Retirement Account have never been distributed. As of September 2019, the account had a balance of more than $788,000. (Weisiger Dep. at 26).

2. Wolas's First Criminal Scheme and Flight from Justice

While at Hunton & Williams, Wolas participated in a pyramid scheme that defrauded

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investors of an estimated $100 million or more. (Bell Aff. (Dkt. No. 3) ("Bell Aff. 1") ¶ 27). He fled New York in 1996 or 1997, becoming a fugitive. (Id. ; Bell Aff. (Dkt. No. 130-2) ("Bell Aff. 2") ¶ 10). In 1997, he was indicted on 119 counts of fraud and grand larceny by the New York District Attorney's Office. (Bell Aff. 1 ¶ 27; Bell Aff. 2 ¶ 10). That criminal proceeding appears to remain pending. (Bell Aff. 1 ¶ 27).

Sturge was aware that criminal charges had been filed against her husband and that he was a fugitive from justice. (Sturge Dep. at 15-16, 19-21).4

After Wolas became a fugitive in 1996 or 1997, Sturge had occasional telephone contact with him. (Id. at 37). As set forth below, beginning in about 2016, she had regular telephone contact with him, and met with him in person on at least three occasions. (Id. at 37, 47, 82-83). Her son Tyler also had telephone contact with him, and met him in person at least once, in 2013. (Id. at 21-22, 37-38; Wolas Dep. at 19-20).

3. Contacts with the Retirement Plan in 1997 and 2000

Katherine B. Weisiger is the Retirement Manager for the law firm, and has helped to administer the Retirement Plan since 1987. (Weisiger Dep. at 13, 14).

Weisiger testified that a woman who identified herself as Cecily Sturge first called her in 1997. (Id. at 43). The woman told her she believed her husband, Scott Wolas, was dead, and asked how she could obtain the funds in the Retirement Account. (Id. at 43, 14). Weisiger told her that "there was a certain procedure and a set number of years would need to elapse before we could do anything related to the account." (Id. at 43-44).

Weisiger further testified that the same woman called again in February or March 2000, and said "she was again calling to request how to obtain the funds in her husband's account." (Id. at 44-45, Ex. 10).5

On March 31, 2000, Weisiger sent a letter to Sturge at her home address in Florida. (Ex. 11; Weisiger Dep. at 44; 47-49). The letter began, "As we have discussed, you are the beneficiary of your husband's account under the Hunton & Williams Retirement Savings Plan." (Ex. 11 at 1). The letter explained that "[u]nder Virginia law, a missing person is presumed dead after seven years. (Id. ). At the appropriate time, you will need to go to court to have [Wolas] declared dead." (Id. ) It also gave the market value of the fund as of that date (more than $209,000) and stated that it was invested in a mutual fund. (Id. ).

Sturge disputes that she "communicated with anybody at Hunton & Williams" in "any capacity" before 2001. (Sturge Dep. at 25). She acknowledged, however, that the March 2000 letter was sent to the address where she was living at the time. (Id. at 25).6 She said she did not "recall" receiving the letter, although she also testified that she "didn't get letters from [Weisiger]." (Id. at 26). She also testified that she did not "remember" having a

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phone call with the law firm during that time period. (Id. ).

For his part, Wolas testified that he "had no contact with the plan administrator [after] 1995." (Wolas Dep. at 23).

4. The 2001 Florida Divorce Proceeding

On August 23, 2001, Sturge filed a petition for divorce from Wolas with the Circuit...

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