ROBERT G. WING, as Receiver for VesCor Capital Corp. and VesCor Capital, Inc., Nevada corporations, VesCorp Capital LLC, VesCorp Capital IV-A, LLC, and VesCorp Capital IV-M, LLC, Nevada limited liability companies, and their related entities, Plaintiff-Appellee,
BERNARD C. BUCHANAN; BERNARDO'S CORPORATION, a Nevada corporation; BUCHANAN FAMILY TRUST; B&I BUCHANAN FAMILY LIMITED PARTNERSHIP, a Nevada limited partnership; BUCHANAN FAMILY LIMITED PARTNERSHIP, a Nevada limited partnership; BUCK INVESTMENTS, LLC; BAKI, LLC, Defendants-Appellants
D.C. No. 2:08-CV-00803-DB D. Utah
Before BRISCOE, Chief Judge, BRORBY, Senior Circuit Judge, and MURPHY, Circuit Judge.
ORDER AND JUDGMENT[*]
Mary Beck Briscoe Chief Judge
Defendants appeal the district court's grant of summary judgment that holds them jointly and severally liable for millions of dollars of fraudulent transfers received from an alleged Ponzi scheme. We reverse and remand, concluding that the applicable statute of limitations may bar the receiver from recovering some of these transfers.
This is the latest in a series of cases that stem from the collapse of VesCor Capital. The receiver appointed by the district court, Robert G. Wing, alleges that VesCor was a Ponzi scheme. He has sought to recover as fraudulent transfers payments VesCor made to investors.
Buchanan is one of those investors. Although the exact amounts are in dispute, Wing asserts Buchanan invested nearly $21 million individually and through entities he controlled. VesCor paid out more than $27 million to those same entities.
VesCor Capital Inc. filed for Chapter 11 bankruptcy in Utah on May 30, 2007. Chapter 11 Voluntary Petition, In re VesCor Capital Inc., No. 07-22435 (Bankr. D. Utah May 30, 2007). On July 6, 2007, the bankruptcy court ordered the appointment of a trustee, "[f]inding that the debtor engaged in pre-petition fraud, dishonesty, incompetence, gross mismanagement, a failure to keep adequate records, and a history of transactions with companies affiliated with the debtor." Order for the Appointment of a Chapter 11 Trustee at 1-2, id., July 6, 2007.
Notwithstanding the bankruptcy proceedings, the Securities and Exchange Commission in February 2008 filed a complaint against various VesCor entities—including VesCor Capital Inc.—alleging that the companies had violated securities laws. The complaint accused VesCor founder Val E. Southwick of "operat[ing] a massive Ponzi scheme, paying existing noteholders with funds from new investors." Complaint at 2, SEC v. VesCor Capital Corp., No. 1:08-cv-00012-DB (D. Utah Feb. 6, 2008). In May 2008, the district court appointed Wing as a receiver.
Wing filed a complaint against Buchanan and the related entities in October 2008. The complaint alleged a single cause of action for fraudulent transfer. The complaint asserted that "[b]ecause the payments [to Buchanan] were made as part of a Ponzi scheme, these transfers were, by definition, made to hinder, delay or defraud creditors and/or investors of VesCor." App. Vol. I at 6. Wing subsequently filed a motion for summary judgment seeking the return of $6, 290, 886 in "fictitious" profits—that is, the difference between the payments Buchanan and the related entities received, in aggregate, and the amounts they invested. Id. at 17-18, 20. Wing also sought the return of $57, 460 in referral fees that Buchanan received for recruiting new investors. Id. at 20.
The district court granted summary judgment in favor of Wing. The court awarded a judgment of $4, 581, 047, plus prejudgment interest. The defendants appealed, but we dismissed for lack of jurisdiction because the district court had not yet calculated prejudgment interest. See App. Vol. VI at 935-36. The district court in June 2012 modified its judgment to eliminate prejudgment interest and entered a final judgment in the amount of $4, 581, 047.
The defendants again appealed, raising four issues. First, defendants argue that the district court had no legal basis for imposing joint and several liability for the fraudulent transfers. Second, they argue that the statute of limitations bars the recovery of many of the alleged fraudulent transfers. Third, defendants argue that they cannot be held liable for transfers that they received before 2000—the earliest year the receiver's expert will attest that VesCor began to exhibit the characteristics of a Ponzi scheme. Finally, defendants ...