Free Reply to Response to Motion - District Court of Arizona - Arizona

1 Guttilla & Murphy, PC 2 3 4
Firm No. 00133300 Alisan M. B. Patten (No. 009795) Ryan W. Anderson (No. 020974) 4150 West Northern Ave. Phoenix, Arizona 85051 (623) 937-2795 [email protected]

5 Attorneys for the Receiver 6 7 8 9 10 11
Guttilla & Murphy, PC
4150 West Northern Ave Phoenix, Arizona 85051 (623) 937-2795

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Lawrence J. Warfield, Receiver, Plaintiff, v. Michael Alaniz, et al. Defendants. Cause No. CV 03-2390 PHX JAT ) ) ) Receiver's Reply in Support of his Motion ) for Partial Summary Judgment on Count ) Nine against Defendants: Leonard and ) Elizabeth Bestgen, Renald Bidwell, Robert ) Carroll, Rudy and Mary Crosswell, ) Charles Davis, Richard Derk, Orville Dale Frazier, Ronald Allen Kerher, Dwight ) ) Lankford, John and Candes Rada, Paul Richard and Patrick Wehrly )

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I. Introduction The Receiver hereby replies in support of his Motion for Partial Summary Judgment. Specifically, the Receiver seeks summary judgment on Count Nine (fraudulent transfer) of his Third Amended Complaint. Based upon the undisputed relevant facts of this case, the Receiver's motion should be granted so that the Receiver can, as soon as possible, equitably distribute the commissions that were paid to the Defendants for selling and spreading the MAF CGA Ponzi scheme nationwide to elderly victims. II. Defendant Bidwell Defendant Bidwell failed to respond to the Receiver's Motion for Partial Summary Judgment on his fraudulent transfer claim (Count Nine) of his Third Amended Complaint. Accordingly, all facts in support of the Receiver's motion must be treated as undisputed by Defendant Bidwell and the legal theories set forth in the motion must be treated as unchallenged. For the foregoing reasons, this Court should grant partial summary judgment to the Receiver against Defendant Bidwell in the sum of $23,682.71, plus costs and pre-and post judgment interest. (See, Rule 56(e), F. R.Civ. P.)
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1 III. The Rada Defendants 2 The remaining defendants consist of Defendants Bestgens, Carroll, Crosswells,

3 Davis, Derk, Frazier, Kerher, Lankford, Radas, Richard and Wehrly (the "Defendants"). 4 IV. Standard of Review 5 The Receiver has supported his motion for summary judgment on his fraudulent

6 transfer claim with: the Declarations of the Receiver; the Declarations of three other well7 credentialed experts; the Defendants' deposition testimony; and the Defendants' 8 responses to interrogatories, requests for admissions, and requests to produce. 9 10 11
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Under Fed. R. Civ. P. 56(c), summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. * * * A court may render summary judgment upon the whole case or only a portion thereof. Fed. R. Civ. P. 56(e). Partial summary judgment is available where it disposes of at least one count of the complaint in its entirety. In re Randy, 189 B.R. 425, 436 (Bankr. Ill. 1995). V. All elements of the Receiver's fraudulent transfer claim have been proven through the undisputed facts of this case.1 What the Court has before it is the following: Defendants do not dispute that they received MAF funds as commission payments. (Defendants were paid their commissions The Defendants do not dispute the factual statements presented in the Receiver's Statement of Facts supporting his Motion for Partial Summary Judgment with one minor exception regarding what Defendant Carroll was ordered to do by the State of California as referenced in the Receiver's original Statement of Facts "ROSOF" F.1.a.xiii. Exhibit 22 supporting the Receiver's statement in that particular factual assertion speaks for itself. Instead of disputing the Receiver's facts, Defendants offer additional factual assertions or legal arguments. (See, Defendants' "Separate Statement of Controverting Facts . . . ") Sometimes, the Defendants claim to have "insufficient knowledge to admit or deny" a factual statement but this does not amount to a denial supported with controverting facts. At Defendants' Separate Statement of Controverting Facts in Support of their Response to the Receiver's Motion for Partial Summary Judgment "DSSCF" nos. F.2, F.13 and F.14, the Defendants claim that Receiver's exhibits 23, 70 and 71 (to his original Statement of Facts) were not previously disclosed to the Defendants. This is incorrect. Exhibit 23 was disclosed at page 104 of the box inventory list in exhibit "A" to the Receiver's First Supplemental Disclosure Statement dated August 8, 2005. Exhibits 70 and 71 were disclosed at page 111 of the box inventory list in exhibit "A" to the Receiver's Third Supplemental Disclosure Statement dated November 18, 2005. 2
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1 by checks from MAF or MAFG and funds from MAFG came from investors who had
2 2 paid for MAF CGAs.) Additionally, the undisputed facts prove that those transfers were

3 made with the actual intent to hinder, delay or defraud MAF's creditors. 4 First, the underlying Ponzi scheme has been proven via the entry of Robert Dillie's

5 guilty plea to counts 1, 21 and 135 of his indictment in U.S. v. Dillie, CR-03-115-PHX6 DGC. (See, ROSOF A.9; DSSCF A.9) From this plea, the "actual intent" to defraud 7 MAF's creditors upon the transfer of MAF funds to Defendants can be inferred. (See,
th 8 Scholes v. Lehmann, 56 F.3d 750 (7 Cir. 1995).) Second, the Receiver has proven by

9 way of his Declaration that Dillie orchestrated a Ponzi scheme using MAF as a tool in his 10 scheme. Dillie caused to be sold MAF CGAs that promised a lifetime stream of income 11 to annuitants as well as a means by which annuitants could make a charitable donation
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12 upon their death. The CGAs were not backed by any reserve funds. Rather, the monies 13 taken from later investors were used to pay annuity payments to earlier investors. From 14 the time of the first commission payment at issue in this case, MAF was insolvent and 15 each subsequent transfer to Defendants only plunged MAF into further insolvency (as did 16 also each sale of a fraudulent MAF CGA due to the liabilities assumed by MAF upon
3 17 each sale). (Defendant Richard previously admitted that the MAF CGAs were part of a

18 Ponzi scheme in his Consent Judgment with the State of Maine. [See, ROSOF no. 19 F.9.a.iv.D; DSSCF no. F.9].) 20 21 22 23 24 25 26 27 28 See, ROSOF nos. F.1.a.iii-iv; F.7.a.iv-v; F.9.a.i.F; F.12.a.iv-v; F.12.b.vi-vii; F.15.a.xiv-xv; F.17.a.iv-v.; F. 17.b.iv-v; F.17.c.vi-vii; F.17d.v; F.18.a.vi; DSSCF nos. F.1, F.7, F.9, F.12, F.15, F.17, F.18; ROSOF A.3.b-d; DSSCF no. A.3.) 3 See, RSOF A.1-6; DSSCF A.1-6. As to Defendants' fact no. A.6, it is noted that the Defendants baldly deny the Receiver's factual statement at ROSOF A.6 showing that at the time of the payment of commissions to Defendants, MAF was insolvent and remained insolvent continuously thereafter. Mere statements of denial that embody factual conclusions are not accorded any weightthin summary judgment proceedings. See, Warfield v. Byron, F.3d , 2006 WL 118250 (5 Cir. January 17, 2006); In re Randy, supra, 189 B.R. at 433.) No facts were offered to controvert RSOF A.6 which was based upon the Receiver's analysis of the business and banking records of the receivership entities. (As set forth in his Declaration, the Receiver is a certified public accountant licensed in Arizona and other states.) The Fifth Circuit Court of Appeals held that the Receiver's analysis of the receivership entity's banking transactions was sufficient to prove the existence of a Ponzi scheme. See, Warfield v. Byron, supra. 3
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1

Where a Ponzi scheme is shown to exist, the "actual intent" element of a

2 fraudulent transfer claim is established. See, Warfield v. Byron, supra. Defendants offer 3 no controverting facts to dispute the existence of the underlying Ponzi scheme in this 4 case. Instead, the Defendants offer a confused argument that since they are "creditors" 5 rather than "investors" of MAF, the entry of Dillie's plea of guilt can't be used to 6 establish a Ponzi scheme. First, the Defendants are not creditors. Second, if any 7 Defendant had filed a claim in the underlying receivership action based upon his failure 8 to receive a commission, the Receiver would have responded that any contract upon 9 which the payment was based was illegal and, therefore, void and unenforceable in that it
4 10 was based upon the payment of commissions for the sales of fraudulent CGAs.

11 Further, In re Randy, supra; In re Ramirez Rodriquez, 209 B.R. 424 (Bankr. Tex. 1997);
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12 and Scholes v. Lehmann, supra, hold that the "fraudulent intent" element of a fraudulent 13 transfer claim can be inferred from the guilty pleas or convictions emanating from 14 corresponding criminal cases (regarding the defrauding of investors). Contrary to 15 Defendants' "theory," the holdings of these cases are not limited to circumstances in
5 16 which the transferees of fraudulent transfer claims were "investors" in a Ponzi scheme.

17

In fact, in complete contradiction to Defendants' argument, the defendants who

18 were sued under the trustee's fraudulent transfer claim in In re Randy, supra, were 19 brokers who sold fraudulent certificates of deposit in the underlying Ponzi scheme. 20 There, the Court then looked to Randy's indictment and conviction (showing that he had 21 operated a fraudulent investment scheme) and held that this evidence proved the "actual 22 intent" element of the fraudulent transfer claims in the civil case. (The Court in Scholes 23 24 25 26 27 28 The Receiver did not concede that "reasonably equivalent value" was given by the Defendants in exchange for their commissions as incorrectly asserted by Defendants. (See, Defendants' Response, pp. 8-9.) The issue of "reasonably equivalent value" is not relevant to the Receiver's motion because the Receiver based his motion on his "actual fraud" claim as opposed to his "constructive fraud" claim. (See, Receiver's Motion, p.1, fn.1; p.10, fn.10.) 5 Furthermore, the transferee in In re Ramirez Rodriquez, supra, was both an investor in, and broker for, a Ponzi scheme. And, Scholes involved three groups of transferees: one investor in the Ponzi scheme; five religious corporations that were donees of the Ponzi scheme; and, the ex-wife of the Ponzi scheme operator. 4
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1 v. Lehmann, supra, held that the intent element was proven via the indictment, guilty plea 2 and plea agreement in the corresponding criminal case.) There is no dispute that the 3 indictment and corresponding plea agreement in the instant case establish that Dillie was 4 operating a Ponzi scheme by selling MAF CGAs. 5 Accordingly, the facts are undisputed that a Ponzi scheme existed and, therefore,

6 an inference of actual intent arises. Alternatively, reasonable minds would agree that 7 there was a Ponzi scheme based upon the undisputed facts and that there was an actual 8 intent to defraud with the transfer of each commission payment to the Defendants.
6 9 VI. The Defendants' did not take their commission payments in "good faith."

10

The Court in In re World Vision Entertainment, Inc., 275 B.R. 641 (Bankr. 2002)

11 best summed up how "good faith" is to be determined in cases (such as the instant one)
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12 where a network of brokers (mainly insurance agents) earned commissions by selling a 13 financial product that, in fact, is an instrument of a Ponzi scheme. The primary broker in 14 In re World Vision Entertainment, similar to the instant case, was an insurance agent who 15 was paid commissions for selling what turned out to be fraudulent promissory notes. The 16 Court held that in analyzing a "good faith" defense under the trustee's fraudulent transfer 17 claim, it would look to what steps a prudent broker should have taken before selling the 18 financial product and then determine if the defendant took those steps. The Court held 19 that the agent did not perform the minimal due diligence steps needed to demonstrate that 20 he had acted in "good faith." Rather, he sold the fraudulent financial product "on faith" 21 after performing an inadequate investigation. Had he completed a proper investigation, 22 he would have learned of the insolvency of the entity selling the product as well as the 23 lack of legitimacy of the entity. 24 The substance of this case is no different. Those selling financial products such as

25 MAF CGAs are required by industry standards to make certain inquiry into the true facts 26 concerning the issuer's financial condition (which in the process should also aid in 27 confirming the product's legitimacy). The Receiver has established by way of expert 28
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The Defendants must prove the affirmative defense of "good faith." 5
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1 testimony those steps the Defendants were obliged to take before selling the MAF
7 2 CGAs. This report was prepared by Mr. Vincent Micciche who for twenty-three years

3 has been training and supervising people who are licensed to sell insurance and/or 4 securities. (See, fn. 7.) Mr. Micciche stated that one of the most important steps the 5 Defendants should have taken before selling the MAF CGAs was obtaining an audited 6 financial statement for MAF. (See, ¶7 of Mr. Micciche's Declaration at Receiver's 7 exhibit 168 at ROSOF.) (The same was held to be true in In re World Vision 8 Entertainment, Inc., supra. "Critically, brokers should carefully analyze several years of 9 audited financial statements of the issuing company, even if a product is insured." Id., at
8 10 654.) No cases or evidence were offered to contradict Mr. Micciche's expert opinion.

11
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Defendants do not dispute that each and every one of them failed to receive an

12 audited financial statement for MAF either before, during or after their sales of MAF 13 CGAs. Instead, the Defendants argue that there is no proof that had they asked for an 14 audited statement they would have received a correct picture of MAF's finances. 15 Defendants miss the point. Having not received an audited financial statement, they were 16 selling "in the blind" or "on faith" with nothing to verify the true financial condition of 17 MAF. Further, a failure to receive an audited financial statement upon request would 18 have been a warning that there was no independent verification of the soundness of the 19 company's financial condition, and, therefore questions regarding the integrity of MAF 20 should have immediately arisen. (See, p. 7, ¶16 of Mr. Micciche's expert report marked 21 as exhibit 168 at ROSOF.) In fact, it does not take an expert to stress the critical 22 importance of obtaining an audited financial statement in order to assess the true financial 23 condition of a company because the Defendants themselves articulated this point. 24 25 26 27 28 See, ROSOF no. F.26.a-b; Defendants offered no facts or other expert testimony to controvert the opinion of Mr. Micciche--DSSCF no. F.26. Mr. Micciche stated in his expert report: "The duty of performing a `due diligence' review of a product being offered to an investor is a universally accepted standard of the financial services industry. The presence of additional licenses or professional designations would only add to that basic duty." (See, p.5, ¶12 of Mr. Micciche's expert report at Receiver's exhibit 168.) 8 Mr. Micciche made clear that regardless of whether the MAF CGAs are securities, or not, the industry standards set forth in his expert report would still apply to the sellers of the MAF CGAs. (See, ¶8, exhibit 168 to ROSOF.) 6
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1 Defendant Kerher stated that he ". . . requested Audited Financial Statements numerous 2 times in 1999. When he did not receive an Audited Financial Statement, despite the fact 3 that Defendant was told a Big Ten accounting firm was working on it, Defendant no 4 longer solicited CGA sales." (Emphasis added.) (See, ROSOF F.22.p; DSSCF no. F.22.) 5 Defendant Lankford testified that after he had sold 29 MAF CGAs, he gave an

6 "ultimatum, that if . . . [he] didn't have [MAF] audited financial statements by that time, . 7 . . [he] would start whatever proceedings that . . . [he] had to, to get this in front of the
9 8 regulators." (See, ROSOF F.22.ee; DSSCF no. 26.)

9

Unfortunately, Defendant Lankford's decision to make demand for the audited

10 financial statement after he had already sold MAF CGAs shows the extreme callousness 11 he exhibited toward the victims in this case by simply relying on the representations of
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12 MAF representatives in order to collect commissions. Similarly, Defendants Kerher and 13 Bestgen also sold MAF CGAs despite having not received an audited financial statement 14 upon request. (See, ROSOF F.17.a.vi; DSSCF no. F.17). On the other hand, Defendants 15 Carroll, Derk, Richard, Frazier and Rada never even bothered to ask for an audited 16 financial statement. (See, ROSOF nos. F.1.a.vi; F.7.a.viii and x; F.9.a.iii.C; 12.a.xi; 17 F.17.c.xii; DSSCF nos. F.1, F.7; F.9, F.12, F.17.) 18 In addition, all Defendants broke at least one law in their sales of the MAF CGAs.

19 Defendants Carroll, Richard, Lankford, Bestgen, Crosswell, Rada, Wehrly and Davis 20 don't dispute that they were not licensed to sell securities at the time they sold the MAF
10 21 CGAs. And, Defendants Carroll, Derk, Richard, Frazier, Kerher and Lankford offer no

22 controverting facts to dispute that they sold MAF CGAs in states in which MAF was not
11 23 authorized to sell annuities or insurance. (The state regulations addressed in the

24 Receiver's Motion on this latter point all targeted annuities.) 25 Thereafter, Defendant Lankford sold two more MAF CGAs, still without having received an audited financial statement for MAF. (See, ROSOF F.22.ff; DSSCF F.22.) 26 10 See, ROSOF F.1.a.i; DSSCF no. F.1; ROSOF F.9.a.i.A.; DSSCF no. F.9; F.15.a.i; DSSCF no. F.15; F.17.a.i; DSSCF no. F.17; ROSOF F.17.b.i; DSSCF no. F.17; 27 F.17.c.i; F.17; ROSOF F.17.d.i; DSSCF no. F.17; F.18.a.i-ii; DSSCF no. F.18 11 See, ROSOF F.2; DSSCF no. F.2; ROSOF F.8.a.; DSSCF no. F.8; ROSOF 28 F.10.a; DSSCF no. F.10; ROSOF F.13; DSSCF no. F.13; F.16.a; DSSCF no. F.16. 7
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1

Additionally, it is undisputed that Defendants Carroll, Crosswell, Davis, Derk,

2 Frazier, Kerher, Lankford, Rada and Wehrly all admitted that they failed to request 3 annual tax returns for MAF (IRS form 990). Had they made demand for the annual tax 4 returns, none would have been provided because none were ever filed. (See, F.19. a-j;
12 5 DSSCF no. F.19.) Again, another critical warning sign was overlooked.

6

Defendants failed to provide any expert opinion on applicable industry standards

7 or case law analyzing "good faith" that challenges or undermines the expert opinion 8 provided by the Receiver's expert witness or the cases cited by the Receiver showing 9 what steps the Defendants were required to take before selling the MAF CGAs. The 10 absence of an audited financial statement was a critical indicator that the MAF CGAs 11 were not financially sound or even legitimate. (The lack of tax returns was an additional
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12 signal.) Reasonable minds would conclude that the Defendants' investigation was
13 13 inadequate. Certainly, relying upon MAF marketing materials or representations of

14 MAF employees/ representatives or acting upon presumptions or assumptions about 15 MAF does not in any way measure up to a "good faith" defense. In ignoring their basic 16 responsibilities to conduct a proper investigation, the Defendants demonstrated they had 17 precious little regard for the elderly victims in this case. Added to all of this was the 18 Defendants' violation of the laws in selling the MAF CGAs. 19 Reasonable minds would conclude that under the undisputed facts of this case,

20 Defendants failed to carry their burden of proof in establishing a "good faith" defense so 21 to protect the commissions they were paid for selling fraudulent MAF CGAS. 22 VII. The MAF CGAs are securities. 23 Contrary to the Defendants' assertion, the MAF CGAs fit the definition of an

24 "investment contract," which is a scheme involving "an investment of money in a 25 common enterprise with profits to come solely from the efforts of others." Securities and 26 Mr. Micciche testified that another step that should have been taken by Defendants before selling the MAF CGAs was obtaining MAF's federal tax returns for at least three 27 years. (See, p. 7, ¶16 of Mr. Micciche's expert report at exhibit 168.) 13 Defendants' assertion at pps. 9-10 of their Response that the Receiver took 28 statements of the Defendants' "out of context" was not supported by their exhibits. 8
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1 Exchange Commission v. W. J. Howey, Co., 328 U.S. 293, 301 (1946). It is undisputed 2 that the Victims paid money to MAF and their funds were pooled. MAF promised to each 3 annuitant a periodic rate of return on his or her investment, which makes their collective 4 fortunes dependent on the success of a single common enterprise and satisfies the 5 common enterprise prong of the Howey test. Hocking v. Dubois, 885 F.2d 1449, 1459
th 6 (9 Cir. 1989)(en banc), cert. denied, 494 U.S. 1078 (1990). The CGAs satisfied the

7 third prong of the Howey test, because the victims depended solely on MAF to manage 8 and invest their funds (See also, ROSOF F.26.d, Exhibit 170). 9 That one purpose of the CGAs may have been charitable, the CGAs still fit the

10 definition of an investment contract, since the MAF sales materials stressed the 11 investment aspects of the CGAs, including referring to the deposit of funds in the CGA as
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12 an investment, and the annuity payments as a "return on your investment." The materials 13 also tout tax benefits that are often associated with investment strategies, including 14 savings on income taxes, capital gains, and estate taxes. (See, RNSOF 15). 15 Moreover, Congress specifically addressed the investment contract issue in the

16 Philanthropy Protection Act of 1995 ("PPA") by noting that because the funds are pooled 17 in a "common enterprise" with "profits" to come from the efforts of the fund's managers, 18 CGAs could be classified as investment contracts. House of Representatives Report 10419 333, Philanthropy Protection Act of 1995, p. 6. MAF acknowledged in its contracts that 20 it managed common investment funds subject to the PPA, which specifically includes 21 CGAs. (See, RNSOF 16; see, e.g. 15 U.S.C. § 80a-3(c)(10)). Finally, a money making 22 scheme is not excluded from the definition of an "investment contract" simply because 23 the scheme promised a contractual entitlement to a fixed, rather than a variable, return. 24 SEC v. Edwards, 540 U.S. 389 (2004). 25 For all the reasons set forth in the Receiver's Motion for Partial Summary

26 Judgment, the MAF CGAs do not fall within the registration exceptions under the PPA. 27 VIII. There is no bar to the Receiver's fraudulent transfer claim. 28 9
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1

The Receiver has previously addressed Defendants' arguments regarding the

14 2 statute of limitations, laches, and statute of repose in his Response to Defendants'

3 Motion for Summary Judgment and hereby incorporates by reference that analysis as well 4 as the Statement of Facts accompanying that Response. 5 In addition to that argued previously by the Receiver regarding an asserted laches

6 defense, the Receiver also points out that Defendants provided no facts showing that they 7 were in any way injured by an alleged time delay. Such injury is a requisite element of 8 laches. (See, Decker v. Hendricks, 97 Ariz. 36, 396 P.2d 609 (Ariz. 1964).) Even if the 9 laches doctrine was applicable, it is axiomatic that those who seek equitable relief must 10 first conduct themselves in an equitable manner. (Cf., Galipault et al. v. Wash Rock 11 Investments, LLC et al., 65 Mass. App. Ct. 73, 836 N.E.2d 1123 (Mass. App. 2005)
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12 discussing equitable claim of specific performance.) Selling fraudulent charitable gift 13 annuities to elderly citizens who were left in the dust holding pieces of paper filled only 14 with empty promises hardly qualifies as equitable conduct deserving of equitable
15 15 protection from the court. As such, the defense of laches is inapplicable.

16

Last, in any event, reasonable minds would agree that the Receiver timely brought

17 his claim within one year after the fraudulent nature of the commissions were or through 18 19 20 21 22 23 24 25 26 27 28 While there may be an argument that the limitation time period regarding constructive fraudulent transfer claims as set forth in A.R.S. §44-1009(A)(2) is a statute of repose given that it provides for a specific legislatively determined time period in which a claim may be brought, the same cannot be said for the limitation period provided for actual fraudulent transfer claims as set forth in A.R.S. §44-1009(A)(1). In Hill v. MTLC, 332 B.R. 835 (Bankr. 2005) cited in the Receiver's Response to the Defendants' Motion for Summary Judgment, the Court analyzed whether the one year limitation period in Florida's counterpart to A.R.S. §44-1009(A)(1) was a statute of repose and held it was not since it was not subject to a specifically defined duration of time. The same rationale applies to the four year limitation period of the statute since it, too, is subject to an exception, i.e., the one year limitation period that is subject to the discovery rule exception. See, Vales v. Kings Hill Condominium Assoc., 211 Ariz. 561, 125 P.3d 381 (Ariz. App. 2005) explaining that a statute of repose is based upon a specific time period regardless of accrual. 15 Contrary to the Defendants' reading of the Receiver's Declaration as set forth at p. 4 of the Defendants' Response to the Receiver's Motion for Partial Summary Judgment, the Receiver did not state that he took possession of all MAF business records upon his appointment. As set forth in the Receiver's Declaration attached as exhibit 10 to his Erratum, it took much effort on the Receiver's part to track down and ultimately obtain the all records now in his possession. 10
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1 the exercise of reasonable diligence could have been discovered by the Receiver for all 2 those reasons set forth in his Declaration attached to the Erratum filed concurrently with 3 this Reply, i.e. one year from the December 11-13, 2002 deposition of Dillie in federal 4 prison. Ordinarily, "due diligence" like that of "good faith" raises a fact question (see, 5 Quirch v. Coro, 182 So.2d 184 (Fla. App. 2003)), however, it may be disposed of by 6 summary judgment where reasonable minds would agree that only one inference arises 7 from the undisputed facts. Such is the case here. There are no documents or declarations 8 or other probative evidence that support any speculative conclusion that the MAF records 9 and the information obtained during Dillie's deposition in December, 2002, could have 10 been obtained earlier from any other persons or sources. 11 IX. Pre and post judgment interest is appropriate.
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12

Prejudgment interest on any damages awarded to the Receiver in this matter is

13 appropriate as a matter of right on the Receiver's fraudulent transfer claims since all 14 damages sought are liquidated. See, AMHS Ins. Co. v. Mutual Ins. Co. of Arizona, 258
th 15 F.3d 1090, 1103 (9 Cir. 2001). Post judgment interest is applicable pursuant A.R.S.

16 §44-1201.Contrary to Defendants argument, A.R.S. §44-1007 does not pose a bar to an 17 award of pre or postjudgment interest. In fact, A.R.S. §44-1007(A)(2) and (A)4(c) both 18 support an award of interest in order to fully satisfy the claims here made. (Costs are 19 applicable pursuant to A.R.S. §12-341.) 20 X. Summary 21 For the foregoing reasons, summary judgment on the Receiver's fraudulent

22 transfer claim against Defendants should be granted in the sums set forth in the 23 Receiver's motion, plus costs and pre- and post judgment interest. 24 25 26 27 28
Case 2:03-cv-02390-JAT Document 488

Respectfully submitted this 17th day of February, 2006. GUTTILLA & MURPHY, PC s/Alisan M. B. Patten Alisan M. B. Patten Ryan W. Anderson Attorneys for the Receiver 11
Filed 02/17/2006 Page 11 of 13

1 2

PROOF OF SERVICE This is to certify that a true copy of the foregoing Reply has been filed

3 electronically with the Court and that the persons on the attached service list designated 4 as "CM/ECF Registered" will be served with same by the Court's CM/ECF system; and 5 that the other persons on the attached service list have been served with a copy of the 6 Reply by first class mail this 17th day of February, 2006. 7 8 9 s/Alisan M. B. Patten Alisan M. B. Patten

Burton M. Bentley 10 ECF Registered [email protected] 11 Attorney for Defendants Leonard and Elizabeth Bestgen, Robert Carroll, Rudy and Mary Crosswell, David Cutshall, Charles Davis, Richard Derk, Orville Frazier, 12 Ronald Kerher, Dwight Lankford, John and Candes Rada, Paul Richards, Fera Shivaee, Patrick and Andrea Wehrly and Donald Muchmore 13 David L. Kagel Brad A. Denton John Torbett 14 Robert Payne ECF Registered ECF Registered [email protected] 15 Gunderson, Denton & Proffitt, P.C. [email protected] [email protected] Attorneys for Paul Pichie 16 [email protected] Attorneys for Michael and Ann Steve A. Bryant 17 McLaughlin Steve Bryant & Associates 3618 Mt. Vernon Street, Suite A 18 Albert P. Massey ECF Registered Houston, TX 77006 Attorneys for Dwight Lankford 19 Lentz, Cantor & Massey [email protected] Robert Tretiak 20 Attorneys for Richard Wilson 4615 N. Ft. Apache Road Las Vegas, NV 89129 21 Gregory Shebest ECF Registered Defendant Pro Se 22 [email protected] Attorney for Heritage Marketing Ren Bidwell 3430 Pacific Ave SE 23 Martin D. Koczanowicz Olympia, WA 98501 Defendant Pro Se 24 Larry Alvin Donaldson ECF Registered David Knutson 25 Koczanowicz & Donaldson [email protected] First Financial Center, Ltd. 119 Third Street, N.E. #333 26 Attorneys for Ron Tucker Cedar Rapids, IA 52401 27 28 12
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1 David Tigges First Financial Center, Ltd. 2 119 Third Street, N.E. #333 Cedar Rapids, IA 52401 3 Bruce F. Walters 4 2606 - C.W. Roosevelt Blvd. Monrow, NC 28110 5 Defendant Pro Per 6 7 8 9 10 11
Guttilla & Murphy, PC
4150 West Northern Ave Phoenix, Arizona 85051 (623) 937-2795

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0758-011(49024)

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Case 2:03-cv-02390-JAT Document 488 Filed 02/17/2006 Page 13 of 13