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Kamian Schwartzman, In His Capacity As Receiver For the v. Robert Stinson

October 31, 2012


The opinion of the court was delivered by: Schiller, J.


Kamian Schwartzman, in his capacity as Receiver for the receivership estate established by the Court in SEC v. Stinson, Civ. A. No. 10-3130, brings this action to recover stolen funds received by Sierra Capital Resources, LLC ("Sierra") and its sole shareholder Michael P. McNamara. Currently before the Court is the Receiver's unopposed motion for summary judgment. For the following reasons, the motion is granted.


The Receiver filed this action on November 30, 2011, alleging that Sierra and McNamara received stolen funds that originated from a Ponzi scheme perpetrated by Robert Stinson, Jr. McNamara is the sole member of Sierra, a Colorado limited liability company. (Pl.'s Statement of Undisputed Material Facts [Pl.'s SOF] ¶¶ 12-13.)

The Court addressed the mechanics of the Stinson Ponzi scheme in a related case, SEC v. Stinson, Civ. A. No. 10-3130, 2011 WL 2462038, at *3-5 (E.D. Pa. June 20, 2011). In brief, Stinson and the Life's Good funds ("Life's Good") he controlled obtained over $17 million from at least 262 investors. Id. at *1. Following an SEC investigation and civil enforcement action, the Court appointed the Receiver to recover investor funds lost in Stinson's scheme. See id. at *2.

The Receiver has traced $260,135.00 obtained through the Ponzi scheme and received by Sierra or McNamara.*fn1 (Pl.'s SOF ¶ 7; Pl.'s Mot. Summ. J. Ex. A [Summ. of Accounts] & E [Wire Transfer Archives].) McNamara wrote himself checks from the Sierra bank account that totaled at least $143,713.00. (Pl.'s SOF¶ 7; Pl.'s Mot. Summ. J. Ex. F [Photocopies of Checks].)The Complaint sets forth three claims against Defendants: (1) avoidance of fraudulent transfers; (2) unjust enrichment; and (3) equitable accounting. On January 23, 2012, McNamara filed a pro se Answer. The Answer admitted two allegations in the Complaint: (1) "McNamara is an adult individual who resides at 1750 East Cedar Avenue, Denver, CO 80209, and is the alter ego of Sierra Capital"; and (2) "The $260,135.00 from Life's Good, Inc. and the Life's Good Funds was wired to an account at FirstBank of Colorado titled in the name of Sierra Capital and over which McNamara had sole signatory authority." (Pl.'s Mot. Summ. J. Ex. B [Def.'s Answer] ¶¶ 13, 19.)

Sierra failed to answer the Complaint or otherwise appear. As a result, on May 29, 2012, the Receiver requested an entry of default and the Clerk entered the default against Sierra. Also on May 29, 2012, the Receiver served Defendants with requests for admission, interrogatories, and a request for production of documents. (Pl.'s SOF ¶ 17; Pl.'s Mot. Summ. J. Ex. H [Discovery Letter].) To date, neither Defendant has responded to the Receiver's discovery requests. On October 4, 2012, the Receiver filed this motion for summary judgment. To date, neither Defendant has responded to the motion for summary judgment.


Summary judgment is appropriate when the admissible evidence fails to demonstrate a genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Sarnowski v. Air Brooke Limousine, Inc., 510 F.3d 398, 401 (3d Cir. 2007). If the moving party has satisfied its initial burden, the nonmoving party must identify evidence that creates a genuine issue of material fact. Player v. Motiva Enters., 240 F. App'x 513, 522 n.4 (3d Cir. 2007). In reviewing the record, "a court must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor." Shuman ex rel. Shertzer v. Penn Manor Sch. Dist., 422 F.3d 141, 146 (3d Cir. 2005). The court may not make credibility determinations or weigh the evidence in considering motions for summary judgment. Goodman v. Pa. Tpk. Comm'n, 293 F.3d 655, 665 (3d Cir. 2002).

A court may not grant as uncontested a motion for summary judgment. E.D. Pa. Loc. R. Civ. P. 7.1(c). Instead, the Court must find that summary judgment is appropriate under Fed. R. Civ. P. 56(c) "by determining that the facts specified in or [in] connection with the motion entitle the moving party to judgment as a matter of law." Hitchens v. Cnty. of Montgomery, 98 F. App'x 106, 110 (3d Cir. 2004). The facts examined by the court may include matters covered in requests for admission where defendants failed to respond, since such matters are deemed to be admitted by non-responding parties. See Fed. R. Civ. P. 36(a)(3). The Third Circuit has "long recognized that deemed admissions are sufficient to support orders of summary judgment." Kelvin Cryosystems, Inc. v. Lightnin, 252 F. App'x 469, 472 (3d Cir. 2007).


A. Defendants Fraudulently Transferred Funds

The Receiver brings his fraudulent transfer claims under the Pennsylvania Uniform Fraudulent Transfer Act ("PUFTA"). The statute defines a "transfer" as "[e]very mode . . . of disposing of or parting with an asset or an interest in an asset. The term includes payment of money, release, lease and creation of a lien or other encumbrance." 12 Pa. Cons. Stat. § 5101(b).A transfer is "fraudulent" as to present or future creditors if the debtor made the transfer: (1) "with actual intent to hinder, delay or defraud any creditor of the debtor"; or (2) "without receiving a reasonably equivalent value in exchange for the transfer or obligation." Id. § 5104(a). "The first provision [of § 5104(a)] provides for liability under an actual intent theory of fraud, while the second is a constructive fraud provision." In re Blatstein, 192 F.3d 88, 96 (3d Cir. 1999) (internal quotation marks omitted). Once a creditor has established fraudulent intent, it may avoid the transfer, attach the transferred asset or other property of the transferee, obtain an injunction against future transfers, or seek appointment of a receiver.12 Pa. Cons. Stat. § 5107.

"[T]he mere existence of a Ponzi scheme is sufficient to establish actual intent to defraud." Hecht v. Malvern Preparatory Sch., 716 F. Supp. 2d 395, 400-01 (E.D. Pa. 2010) (quoting Donell v. Kowell, 533 F.3d 762, 770 (9th Cir. 2008)); see also Wing v. Dockstader, Civ. A. No. 11-4006, 2012 WL 2020666, at *2 (10th Cir. June 6, 2012) ("[O]nce it is established that a debtor acted as a Ponzi scheme, all transfers by that entity are presumed fraudulent."). Because the Receiver has established the existence of a Ponzi scheme and the transferor of the funds, Life's Good, was ...

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