The opinion of the court was delivered by: Diamond, J.
In March 2010, the Receiver supervising the recovery of assets on behalf of investors defrauded by "Ponzi" scheme operator Joseph S. Forte sued Malvern Preparatory School, seeking to recover, inter alia, $900,000 in "gifts" that Forte purportedly gave to the School. As alleged by the Receiver, Forte stole these funds from his investor-victims. Remarkably, although Malvern does not dispute that the funds it received from Forte were stolen, it has counterclaimed against the Receiver for breach of contract and promissory estoppel, alleging that: (1) Forte failed to donate additional funds he had pledged to the School; and (2) because Malvern relied to its detriment on Forte's pledge and because the Receiver now stands in Forte's shoes, the Receiver is liable for the promised funds.
To state Malvern's contentions is to demonstrate their utter absurdity. See SEC v. Chenery Corp., 332 U.S. 194, 214 (1947) (Jackson, J., dissenting) ("Now I realize fully what Mark Twain meant when he said, 'The more you explain it, the more I don't understand it.'"). If Malvern believes that Forte owes the School money, it may proceed against him, not the Receiver I appointed to help recover assets on behalf of Forte's victims.
A. The Government's Allegations
On January 7, 2009, the Securities and Exchange Commission and the Commodity Futures Trading Commission filed related actions, charging Forte and his Limited Partnership, Joseph Forte, L.P., with violating numerous securities laws through Forte's operation of a Ponzi scheme from 1995 to 2008. See SEC v. Forte, Civil No. 09-63, Doc. No. 1; CFTC v. Forte, Civil No. 09-64, Doc. No. 1; see alsoCunningham v. Brown, 265 U.S. 1, 13 (1924). The Agencies based their allegations largely on Forte's admissions and related documents. See, e.g., Civil No. 09-63, Doc. No. 1 ¶¶ 17, 22, 27. It now appears that Forte fraudulently solicited and accepted original cash investments of $78.6 million from 125 investors through the sale of securities in the form of limited partnerships. Forte falsely represented that the investments were earning annual returns of 18% to over 38%, and that as of September 2008, the investments had increased in value to more than $154 million. Id. ¶¶ 4, 18, 24. In fact, Forte had made virtually no investments. Rather, he paid himself and his early investors with monies provided by the Partnership's later investors. Civil No. 09-64, Doc. No. 1 ¶ 4.Of the 125 investors, forty-one recovered their full $22.2 million principal payments as well as $8.6 million in "profits." See Civil No. 09-63, Doc. No. 49, Ex. 2. Eighty-four investors lost a total of $34.8 million from their original investments of $56.4 million. Id.
On November 24, 2009, after he pled guilty to wire fraud, mail fraud, bank fraud, and money laundering charges, Forte was sentenced to a term of fifteen years imprisonment. See United States v. Forte, Criminal No. 09-304, Doc. No. 35.
On January 7, 2009, the SEC and the CFTC asked me to freeze "any funds or other assets presently held by [Joseph Forte or Forte, L.P.], under their control or over which they exercise actual or apparent investment or other authority, in whatever form such funds or other assets may presently exist and wherever located." Civil No. 09-63, Doc. No. 2 ¶ I; No. 09-64, Doc. No. 2 ¶¶ II-III. Forte did not dispute the Agencies' allegations, and, on September 30, 2009, consented to a permanent injunction and asset freeze. Civil No. 09-63, Doc. No. 34; Civil No. 09-64, Doc. No. 32.
On March 30, 2009, I granted the Agencies' unopposed Motion to appoint Marion A. Hecht as Receiver of the Limited Partnership Estate, and authorized her to retain Lawrence T. Hoyle, Jr. as Counsel. Civil No. 09-63, Doc. No. 26, ¶ II; Civil No. 09-64, Doc. No. 24, ¶ II. The Receiver has submitted two Reports (on August 27, 2009 and March 1, 2010), summarizing the steps she has taken to assume control of the Partnership assets.As of March 1, 2010, the Receiver had collected $359,616 from the sale of the Fortes' household items, the return of some of Forte's charitable donations, and the like. Civil No. 09-63, Doc. No. 49, Ex. 1; Civil No. 09-64, Doc. No. 47, Ex. 1. She had also collected from five limited partners some $547,383 in profits, for a total recovery of $985,103.
C. The Receiver's Complaint and Malvern's Counterclaim
"Founded in 1842, Malvern is an independent, Catholic school whose mission is to prepare young men 'for college, leadership and for life.'" (Doc. No. 16 at 12.) After his son enrolled at the School in September 2003, Forte "began to volunteer a significant amount of his time [to] Malvern's athletic programs." (Id. at 14.)
On March 29, 2010, the Receiver filed the instant action -- one of seven Ms. Hecht brought against individuals and entities alleged to have received misappropriated Partnership assets. See Hecht v. Irwin, Civil No. 10-1371; Hecht v. Abraham Lincoln Found. of the Union League of Phila., Civil No. 10-1372; Hecht v. Skee Ball Profit Sharing Plan Participants, Civil No. 10-1373; Hecht v. Forte, Civil No. 10-1375; Hecht v. Crawford, Wilson, & Ryan Profit Sharing Plan Participants, Civil No. 10-1376; Hecht v. Investors Nos. 1102 & 1119, Civil No. 10-1377. The Receiver alleges that Malvern received [more than $900,000 in] misappropriated Partnership assets from [Joseph] Forte as purported charitable donations, and... also received [more than $200,000 in] Partnership assets from one or more limited partners of the Partnership, including the Thornton D. & Elizabeth S. Hooper Foundation.
Malvern Prep has refused the Receiver's request to return the misappropriated funds and other assets that it received from Forte and/or others. (Doc. No. 1 ¶ 1.) Seeking to recover these gifts "for the benefit of [the Partnership's] innocent investors," the Receiver brings three state law claims against Malvern: the first two under the Pennsylvania Uniform Fraudulent Transfer ...