Opinion
Civil Action No. 3:02-CV-0605-R.
January 26, 2005.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This matter came on trial before the Court, the Honorable Jerry Buchmeyer, on January 10, 2005, beginning at approximately 10:00 a.m. Plaintiff receiver, Lawrence J. Warfield, as receiver for International Education Research Corporation ("IERC"), was present and represented by William J. Garrison and Kelly M. Crawford of Scheef Stone, L.L.P. Defendants MM Engraving and Manufacturing, Co. ("MM") and Anthony J. Martella ("Martella") were present and represented by Mitchell Madden and Thomas V. Murto III of the Law Offices of Mitchell Madden.
The Court, having heard the evidence and the arguments of counsel presented at trial, and in accordance with Federal Rules of Civil Procedure, Rule 52, makes the following findings of fact and conclusions of law.
A. Findings of Fact
1. Prior to March 31, 1999, understanding at least that the Court had frozen the accounts of Benjamin Cook and otherwise restricted his disposition of monies within his control, defendant Martella communicated with Mr. Cook and agreed to advance monies to Mr. Cook's attorneys with the understanding that Mr. Cook would then immediately "reimburse" the same sum of monies to defendant Martella.
2. On March 31, 1999 and April 8, 1999, defendant MM paid from its Chase Bank checking account (account number 25300016857) the amounts of $10,000 and $50,000, respectively, to Mr. Cook's attorneys.
3. On April 9, 1999, at Mr. Cook's direction, receivership entity IERC wired $60,000 from its U.S. Bank checking account (account number 153790076829) to defendant MM's Chase Bank account (account number 25300016857).
4. Defendants were aware or reasonably should have been aware of the Court's orders freezing Mr. Cook's accounts and otherwise restricting Mr. Cook's disposition of assets within his control when defendant MM transferred $60,000 to Mr. Cook's attorneys (March 31, 1999 and April 8, 1999) and received a $60,000 "reimbursement" from IERC (April 9, 1999).
5. IERC was part of an illegal Ponzi scheme on April 9, 1999, when it transferred $60,000 to defendant MM. IERC was created to perpetuate a fraud and all of its assets derived from fraudulent activities.
6. IERC was insolvent on April 9, 1999, when it transferred $60,000 to defendant MM.
7. Defendant MM gave no reasonably equivalent value to IERC for IERC's April 9, 1999 transfer of $60,000 to defendant MM.
8. IERC transfered $60,000 to defendant MM, and defendant MM received these monies, to hinder enforcement of the Court's orders freezing Mr. Cook's accounts and otherwise restricting Mr. Cook's disposition of assets within his control, and to further defraud investors in the Dennel Trading Program.
9. With regard to transferring $60,000 to Mr. Cook's attorneys on March 31, 1999 and April 8, 1999, and receiving $60,000 from IERC on April 9, 1999, defendant individual Martella utilized his control over defendant corporation MM for an illegal purpose (violation of the Court's orders) and to perpetuate a fraud (the Dennel Trading Program).
10. Defendant Martella acted with fraudulent intent in causing defendant MM to transfer monies to Mr. Cook's attorneys and receive monies from IERC.B. Conclusions of Law
1. IERC's April 9, 1999 wire transfer of $60,000 to defendant MM was a fraudulent transfer under Texas Business and Commerce Code, section 24.005(a)(1).
2. IERC's April 9, 1999 wire transfer of $60,000 to defendant MM was a fraudulent transfer under Texas Business and Commerce Code, section 24.005(a)(1).
3. In equity, Defendants should be required to disgorge $60,000, as the $60,000 defendant MM received from IERC on April 9, 1999 constitutes an unjust enrichment.
4. Defendant MM is the alter ego of defendant Martella as to defendant MM's payment of $60,000 to Mr. Cook's attorneys on March 31, 1999 and April 8, 1999, and its receipt of $60,000 from IERC on April 9, 1999.
5. Defendants' asserted affirmative defenses of offset, "good faith," waiver and laches are without merit.
SO ORDERED.