James H Donell v. Soheila Mojtahedian, No. 2:2012cv02319 - Document 38 (C.D. Cal. 2013)
Court Description: ORDER GRANTING PLAINTIFFS MOTION FOR SUMMARY JUDGMENT 15 . Defendant must pay Plaintiff 40,000.00 plus prejudgment interest of 2,845.97. by Judge Dean D. Pregerson. (lc). Modified on 9/12/2013 (lc). Modified on 9/12/2013 (lc).
Download PDF
<![CDATA[
James H Donell v. Soheila Mojtahedian Doc. 38 1 2 O 3 4 NO JS-6 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 JAMES H DONELL, Receiver for NewPoint Financial Services Inc, 13 14 Plaintiff, v. 15 SOHEILA MOJTAHEDIAN, 16 Defendant. ___________________________ 17 18 19 ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 12-02319 DDP (JEMx) ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT [Docket No. 15] I. Background Plaintiff, James H. Donell (“Plaintiff” or “Receiver”) is the 20 duly appointed and acting Receiver for the NewPoint Entities, 21 including NewPoint Financial Services, Inc. (“NewPoint”). 22 Receiver was appointed on January 8, 2010, pursuant to an order of 23 the United States District Court for the Central District of 24 California in Case No. 10-7 CV-0124-DDP (JEMx), S.E.C. v. NewPoint 25 Financial Services, Inc., et al. ("SEC Case"). 26 Genuine Issues ("SGI") ¶ 1.) 27 was created and operated by John Farahi. 28 the co-owner, president, secretary and treasurer of NewPoint. The (Statement of NewPoint is a Nevada company which (Id. ¶ 2.) Farahi was (Id. Dockets.Justia.com 1 ¶ 3.) 2 dollars of debentures to numerous investors. 3 NewPoint, controlled by Farahi, offered and sold millions of (Id. ¶ 4.) In his June 4, 2012, plea agreement, Farahi admitted that he 4 generally used investor funds to make interest and principal 5 repayments to previous investors, to pay personal expenses, and to 6 finance higher-risk futures options. 7 ¶¶ g, j.) 8 that he was engaged in a Ponzi scheme, which is “any sort of 9 fraudulent arrangement that uses later acquired funds or products (Davidson Decl. Ex. D at 30 In other words, Farahi admitted in his plea agreement 10 to pay off previous investors.” 11 Technology Group, Inc., 916 F.2d 528, 531 (9th Cir. 1990). 12 plea agreement states that the Ponzi scheme began “at least as 13 early as in or about November 2005, and continuing to in or about 14 April 2009.” 15 agreement, as a result of the Ponzi scheme and fraud, NewPoint 16 investors lost millions of dollars. 17 g, j.) 18 In re Agricultural Research (Davidson Decl. Ex. D at 28.) The According to the plea (Davidson Decl. Ex. D at 30 ¶¶ Defendant Soheila Mojtahedian (“Defendant”) states that in 19 2001 she invested $200,000 with Farahi.1 20 Defendant received payments from the NewPoint Entities on her 21 investment totaling $240,000. 22 received on or after November 2005 was in December of that year for 23 an amount of $203,500. 24 /// 25 /// (Mojtahedian Decl. § 2.) (SGI ¶ 19.) The only payment she (Grobstein Decl. ¶ 17 Ex. 1.) 26 1 27 28 It appears that the name of the company she invested with was called NewPoint Investments, Inc. (Mojtahedian Decl. Ex. 1.) However, Defendant received most of her payments from NewPoint. (Id. Exs. 2-4) 2 1 2 II. Legal Standard Summary judgment is appropriate where the pleadings, 3 depositions, answers to interrogatories, and admissions on file, 4 together with the affidavits, if any, show “that there is no 5 genuine dispute as to any material fact and the movant is entitled 6 to judgment as a matter of law.” 7 seeking summary judgment bears the initial burden of informing the 8 court of the basis for its motion and of identifying those portions 9 of the pleadings and discovery responses that demonstrate the Fed. R. Civ. P. 56(a). A party 10 absence of a genuine dispute of material fact. 11 Catrett, 477 U.S. 317, 323 (1986). 12 the evidence must be drawn in favor of the nonmoving party. 13 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 242 (1986). 14 If the moving party does not bear the burden of proof at trial, it 15 is entitled to summary judgment if it can demonstrate that “there 16 is an absence of evidence to support the nonmoving party’s case.” 17 Celotex, 477 U.S. at 323. 18 Celotex Corp. v. All reasonable inferences from See Once the moving party meets its burden, the burden shifts to 19 the nonmoving party opposing the motion, who must “set forth 20 specific facts showing that there is a genuine issue for trial.” 21 Anderson, 477 U.S. at 256. 22 party “fails to make a showing sufficient to establish the 23 existence of an element essential to that party’s case, and on 24 which that party will bear the burden of proof at trial.” 25 477 U.S. at 322. 26 that a reasonable jury could return a verdict for the nonmoving 27 party,” and material facts are those “that might affect the outcome 28 of the suit under the governing law.” Summary judgment is warranted if a Celotex, A genuine issue exists if “the evidence is such 3 Anderson, 477 U.S. at 248. 1 There is no genuine issue of fact “[w]here the record taken as a 2 whole could not lead a rational trier of fact to find for the non- 3 moving party.” 4 475 U.S. 574, 587 (1986). 5 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., It is not the court’s task “to scour the record in search of a 6 genuine issue of triable fact.” 7 1278 (9th Cir. 1996). Counsel has an obligation to lay out their 8 support clearly. 9 1026, 1031 (9th Cir. 2001). Keenan v. Allan, 91 F.3d 1275, Carmen v. San Francisco Sch. Dist., 237 F.3d The court “need not examine the entire 10 file for evidence establishing a genuine issue of fact, where the 11 evidence is not set forth in the opposition papers with adequate 12 references so that it could conveniently be found." 13 III. Analysis 14 15 Id. The Uniform Fraudulent Transfer Act (“UFTA”) as adopted by California states in relevant part: 16 (a) A transfer made or obligation incurred by a debtor is 17 fraudulent as to a creditor, whether the creditor's claim 18 arose before or after the transfer was made or the obligation 19 was incurred, if the debtor made the transfer or incurred the 20 obligation as follows: 21 (1) With actual intent to hinder, delay, or defraud any 22 creditor of the debtor. 23 (2) Without receiving a reasonably equivalent value in 24 exchange for the transfer or obligation, and the debtor 25 either: 26 (A) Was engaged or was about to engage in a business 27 or a transaction for which the remaining assets of 28 4 1 the debtor were unreasonably small in relation to 2 the business or transaction. 3 (B) Intended to incur, or believed or reasonably 4 should have believed that he or she would incur, 5 debts beyond his or her ability to pay as they 6 became due. 7 Cal. Civ. Code § 3439.04(a).2 8 under UFTA against Ponzi scheme investors, the general rule is that 9 to the extent innocent investors have received payments in excess “Where causes of action are brought 10 of the amounts of principal that they originally invested, those 11 payments are avoidable as fraudulent transfers.” 12 533 F.3d 762, 770 (9th Cir. 2008). 13 Donell v. Kowell, The Ninth Circuit has adopted a two-step approach to determine 14 how much, if anything, a receiver can recover from a “winning” but 15 innocent investor in a Ponzi scheme. 16 Step one determines the investor’s liability with the “netting 17 rule”: “Amounts transferred by the Ponzi scheme perpetrator to the 18 investor are netted against the initial amounts invested by that 19 individual. 20 liability, and the court determines the actual amount of liability, 21 which may or may not be equal to the net gain, depending on factors 22 such as whether transfers were made within the limitations period 23 or whether the investor lacked good faith.” 24 25 Kowell, 533 F.3d at 771. If the net is positive, the receiver has established Id. In step two, “to determine the actual amount of liability, the court permits good faith investors to retain payments up to the 26 2 27 28 “Notwithstanding the quoted language above, all courts construing UFTA state that there is an ‘or’ between subsections (a)(1) and (a)(2).” Donell v. Kowell, 533 F.3d 762, 767 n.1 (9th Cir. 2008). 5 1 amount invested, and requires disgorgement of only the ‘profits’ 2 paid to them by the Ponzi scheme.” 3 Id. at 772. Here, Farahi admitted NewPoint’s Ponzi scheme in his plea 4 agreement, and Defendant admitted to receiving a $40,000 profit on 5 her investment with NewPoint. 6 liable to pay Plaintiff $40,000 for three reasons. 7 plea agreement is not evidence of a Ponzi scheme. 8 action is barred by the statute of limitations. 9 statute of repose, she is only liable to pay Plaintiff $7,000, not 10 Defendant claims that she is not First, Farahi’s Second, this Third, under the $40,000. 11 As to Defendant’s first argument, the Ninth Circuit has 12 decided that Farahi’s plea agreement is conclusive evidence of the 13 Ponzi scheme: “[T]he plea agreement preclusively establishes that 14 [the Ponzi scheme’s operator’s] transfers of purported profits to 15 investors during his operation of the Ponzi scheme were made with 16 the actual intent to defraud.” 17 (9th Cir. 2008). 18 is conclusive evidence of a Ponzi scheme, it is not conclusive 19 evidence that NewPoint was a Ponzi scheme at the time Defendant 20 received payments from NewPoint. 21 Defendant was in December 2005, and Farahi’s plea agreement states 22 that the Ponzi scheme began “at least as early as in or about 23 November 2005.” 24 early as” language suggests that the Ponzi scheme had begun by the 25 end of November 2005. 26 some doubt as to whether a Ponzi scheme existed in December 2005. 27 28 In re Slatkin, 525 F.3d 805, 813 Defendant states that even if the plea agreement NewPoints’ final payment to (Davidson Decl. Ex. D at 28.) The “at least as However, the “in or about” language creates Some doubt, though, is permissible. Here, because Plaintiff bears the burden of proving a Ponzi scheme to be entitled to 6 1 summary judgment he “must come forward with evidence which would 2 entitle [him] to a directed verdict if the evidence went 3 uncontroverted at trial.” 4 (9th Cir. 1992). 5 Ponzi scheme was in existence by November 2005, “the burden shifts 6 to [the non-moving party] to set forth specific facts” that 7 indicate the Ponzi scheme began after NewPoint’s December 2005 8 transfer to Defendant. 9 no evidence of when the Ponzi scheme began. Houghton v. South, 965 F.2d 1532, 1536 Because the plea agreement suggests that the Id. at 1537. However, Defendant presents Thus, the only 10 reasonable conclusion is that it was in existence at the time of 11 the December transfer, and thus summary judgment is appropriate on 12 this issue. 13 Plaintiff states that Receiver had sufficient information to 14 file this lawsuit more than a year before he did, and, thus, the 15 action is barred by the statute of limitations. 16 statute of limitations states: “A cause of action with respect to a 17 fraudulent transfer or obligation under this chapter is 18 extinguished unless action is brought . . . within four years after 19 the transfer was made or the obligation was incurred or, if later, 20 within one year after the transfer or obligation was or could 21 reasonably have been discovered.” 22 (emphasis added). 23 affirmative defense, Defendant bears the burden of proving that it 24 bars the instant case. 25 1112591, at *19 (N.D. Tex. Apr. 13, 2007). 26 The relevant Cal. Civ. Code § 3439.09(a) Because the statute of limiatations is an Warfield v. Carnie, 3:04-CV-633-R, 2007 WL Defendant presents evidence that Receiver knew more than a 27 year in advance of filing this case that NewPoint made transfers to 28 Defendant. (Donell Decl. ¶ 8; Grobstein Decl. Ex. 2.) 7 However, 1 Defendant’s receipt of funds, alone, could not establish whether 2 she received a net profit or a net loss from the Ponzi scheme. 3 only established that she likely invested with NewPoint. 4 district court noted in analyzing an equivalent statute of 5 limitations under similar circumstances, knowledge of an 6 individual’s status as an investor is insufficient to begin running 7 the statute of limitations: “Defendants provide no evidence to the 8 Court that the Receiver's mere knowledge of the Ponzi scheme, 9 knowledge of the identities of many of its investors, and It As one 10 knowledge, specifically, that the Carnies were investors somehow 11 put him on notice that the Carnie Defendants reaped a net profit 12 from their investments.” 13 (holding that there was no triable issue of fact regarding the 14 statute of limitations).3 15 Carnie, 2007 WL 1112591 at *18-19 Additionally, Plaintiff’s evidence indicates that preparing 16 the numerous Receiver actions related to the NewPoint Ponzi scheme 17 was a massive undertaking, which included reviewing tens of 18 thousands of transactions. 19 (Grobstein Decl. ¶ 6.) Because the statute of limitations is an affirmative defense, 20 Plaintiff is entitled to summary judgment on this issue if he can 21 demonstrate that “there is an absence of evidence to support the 22 nonmoving party’s [affirmative defense].” 23 323. 24 not indicate to the Receiver whether she received a net profit or a 25 net loss. Celotex, 477 U.S. at Receiver has met this burden because Defendant’s evidence did Defendant’s evidence, then, essentially amounts to 26 3 27 28 The Court recognizes that California law governs the statute of limitations analysis. Although Carnie is not a California case, it is persuasive authority in light of its similarities with the instant cases. 8 1 speculation–speculation that Receiver should have been able to 2 discover within a year of learning that NewPoint transferred funds 3 to Defendant facts sufficient to meet Rule 11 obligations for 4 bringing this case against Defendant. 5 insufficient, as Plaintiff was required to “set forth specific 6 facts showing that there is a genuine issue for trial.” 7 477 U.S. at 256. 8 light of the time-consuming nature of analyzing NewPoint’s records 9 (discussed further in footnote four), Speculation, though, is Anderson, Thus, because Defendant has no evidence that, in Plaintiff should have 10 discovered his cause of action against Defendant sooner than he 11 did, Defendant has not met her burden for preventing summary 12 judgment.4 13 4 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendant also states that a “First Report” supports her statute of limitations argument. (Opposition at 8:8-24.) However, this First Report does not appear to have been submitted to the Court for consideration in the instant case. Were it submitted, though, it would have been inconsequential. The First Report was submitted in the SEC case at Docket No. 232. Although the First Report indicates that as of June 30, 2010 Receiver had received copies of the relevant financial information from NewPoint’s bank accounts, it also indicated that numerous documents needed to be reviewed before recovery actions, such as this case, could be brought. The First Report noted that NewPoint used more than fifty bank accounts, and transferred “substantial amounts of money among the bank accounts on a regular, and sometimes, daily basis.” (First Report ¶¶ 10-11.) Defendant’s speculation that Receiver knew he had, or should have known he had, sufficient information to bring the instant action is insufficient. See Janvey v. Alguire, No. 3:09-CV-0724-N, 2013 WL 2451738, at *11 (N.D. Tex. Jan. 22, 2013) (“[G]iven the size and scope of the Stanford scheme, discovering the fraudulent nature of the Net Winning transfers certainly takes time. Further, the burden is on the Net Winners to [prove the statute of limitation bars the action.] No Net Winners offer any evidence that the Receiver actually knew of the fraudulent nature of any of these interest transactions but failed to file suit within a year. Accordingly, the Receiver's claims are not barred by limitations.”); see also Carnie, 2007 WL 1112591 at *19 (“Defendants merely make conclusory assertions regarding when the Receiver knew of the facts giving rise to the claims against them. Under the summary judgment standard, these conclusory assertions are insufficient. Therefore, the Receiver timely filed (continued...) 9 1 Defendant also states that as a matter of law, Receiver Donell 2 only had one year from the date of his appointment as Receiver to 3 bring the instant case. 4 an individual has a year from the date he discovered or could have 5 discovered a Ponzi scheme to file suit. 6 3439.09(a). 7 for the purpose of discovering fraud, the one-year fraud discovery 8 period began running the day he was appointed Receiver. 9 cites the Supreme Court case of Gabelli v. S.E.C., 133 S. Ct. 1216 The statute of limitations indicates that Cal. Civ. Code § Defendant states that because Receiver was appointed Defendant 10 (2013), in support of this argument. 11 that “the fraud discovery rule has not been extended to Government 12 enforcement actions for civil penalties.” 13 distinguishable on two grounds. 14 Government. 15 1425, 1431-32 (1988) (“A receiver is an officer or representative 16 of the court 17 litigation.”). 18 i.e. an attempt to punish Defendant as a wrongdoer; Plaintiff only 19 seeks a return of Defendant’s profits to minimize the losses of 20 NewPoint’s other victims. 21 1218 (“The discovery rule helps to ensure that the injured receive 22 recompense. 23 compensation, are intended to punish, and label defendants 24 wrongdoers.”) However, Gabelli only held Id. at 1222. First, Receiver is not the Sec. Pac. Nat'l Bank v. Geernaert, 199 Cal. App. 3d appointed to manage property that is the subject of Second, this case does not involve civil penalties, Compare Gabelli, 133 S. Ct. at 1223, But this case involves penalties, which go beyond 25 26 4 27 Gabelli is (...continued) suit against the Carnie Defendants as a matter of law.”) 28 10 1 Next, Defendant argues that the statute of repose limits her 2 liability to $7,000. The relevant statute of repose states: 3 “Notwithstanding any other provision of law, a cause of action with 4 respect to a fraudulent transfer or obligation is extinguished if 5 no action is brought or levy made within seven years after the 6 transfer was made or the obligation was incurred.” 7 § 3439.09(a). 8 NewPoint to her were within the statute of repose’s seven-year 9 period: one on July 14, 2005 for $3,500 and one on December 13, Cal. Civ. Code Defendant claims that only two transfers from 10 2005 for $203,500. 11 investment’s principal was $200,000, Defendant states, her maximum 12 liability is $7,000. 13 (Opposition at 12:16-22.) Because her Defendant is incorrect. Defendant received $33,000 from NewPoint in transfers that 14 occurred outside the statute of repose’s seven year window. 15 Ninth Circuit has held that in fraudulent transfer cases, when some 16 transfers occur outside the statute of limitations and some occur 17 within the statute of limitations, a court “may presume that the 18 earliest payments received by the investor are payments against the 19 investor’s claim for restitution.” 20 Cir. 2008). 21 made outside the statute of limitations are repayments on an 22 investor’s principal. 23 the Ninth Circuit’s ruling on the statute of limitations does not 24 also apply to the statute of repose. 25 received a net profit of more than $40,000, and because she 26 received more than $40,000 in transfers during the statute of 27 repose’s seven year window, the statute of repose does not prevent 28 Plaintiff from collecting the $40,000 he seeks. The Kowell, 533 F.3d at 774 (9th That is to say that a court may presume that payments See id. There is no reason to believe that 11 Thus, because Defendant 1 Finally, Defendant requests to continue the instant case until 2 she can take Farahi’s deposition, which she estimated would occur 3 within 60 days. 4 made in early March of this year, roughly 6 months (about 180 days) 5 ago. 6 Court regarding the Farahi deposition, such as whether it has 7 occurred, would occur, or was still necessary to occur. 8 Defendant must provide this Court with all information necessary to 9 rule in her favor, Cent. Dist. L. R. 7-5, and since Defendant has (Bluver Decl. ¶ 7.) That request, however, was Defendant has filed no supplemental information with the Since 10 already had approximately three times as many days as she requested 11 to conduct the Farahi deposition, Defendant’s request to continue 12 the instant hearing fails. 13 (6th Cir. 2009) (explaining that the party moving for a Rule 56(d) 14 continuance bears the burden of proving its propriety). 15 IV. Conclusion 16 See Everson v. Leis, 556 F.3d 484, 493 For the reasons stated herein, Plaintiff’s Motion is GRANTED. 17 Defendant must pay Plaintiff $40,000 plus prejudgment interest of 18 $2,845.97.5 19 IT IS SO ORDERED. 20 Dated: September 12, 2013 DEAN D. PREGERSON United States District Judge 21 22 23 5 24 25 26 27 28 Receiver is entitled to prejudgment interest of 7%. Cal. Const. Art. XV. However, Receiver has only provided the Court with calculations of what prejudgment interest would have been had this Motion been heard on March 25, 2013, the Motion’s originally scheduled date. (Davidson Decl. ¶ 2.) Receiver’s Reply Brief, which was filed on August 5, 2013, does not provide any new calculations, nor does it ask for an amount greater than $2,845.97. Since Plaintiff must provide the Court with sufficient information to rule in his favor, Cent Dis. L. R. 7-5, this Court will award $2,845.57 in prejudgment interest. 12
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
