United States Securities and Exchange Commission v. Ahmed et al

Filing 2131

ORDER granting in part Harris St. Laurent & Wechsler's Motion for Alternative Relief 1925 . Signed by Judge Janet Bond Arterton on 12/17/2021. (Canevari, D.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

UNITED STATES SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
IFTIKAR AHMED,
Defendant, and
Civil No. 3:15cv675 (JBA)
IFTIKAR ALI AHMED SOLE PROP; I-CUBED
DOMAINS, LLC; SHALINI AHMED; SHALINI AHMED December 17, 2021
2014 GRANTOR RETAINED ANNUNITY TRUST;
DIYA HOLDINGS LLC; DIYA REAL HOLDINGS, LLC;
I.I. 1, a minor child, by and through his next friends
IFTIKAR and SHALINI AHMED, his parents; I.I. 2, a
minor child, by and through his next friends
IFTIKAR and SHALINI AHMED, his parents; and I.I.
3, a minor child, by and through his next friends
IFTIKAR and SHALINI AHMED, his parents,
Relief Defendants.

ORDER GRANTING IN PART HARRIS ST. LAURENT & WECHSLER’S MOTION FOR
ALTERNATIVE RELIEF

On November 5, 2020, Harris St. Laurent & Wechsler LLP (“HSW”) moved for

payment of $73,447.29 held in its escrow account, as partial payment of its outstanding
attorneys’ fees, and for related relief based on HSW’s obtaining an AAA Arbitration Consent

Award against the Relief Defendants [Doc. # 1679]. On August 4, 2021, the Court denied
HSW’s motion given the fluctuations in the Receivership Estate’s value [Doc. # 2047]. During

the pendency of that motion but before issuance of the Court’s denial, HSW filed its
Supplemental Request for Alternative Relief as Part of Pending Motion for Payment of

Attorneys’ Fees (“HSW Mot.”) seeking to “secure its position [as a creditor] junior to the SEC.”

(HSW Mot. [Doc. # 1925] at 2.) While the Receiver and Relief Defendants oppose this motion,

Relief Defendants state that they “have no issue with HSW being paid.” (See Receiver’s Obj.
to Harris St. Laurent & Wechsler LLP’s Suppl. Req. for Alternative Relief as Part of Pending

Mot. for Payment of Att’ys’ Fees (“Receiver’s Opp’n”) [Doc. # 1979]; Relief Defs.’ Opp’n to
HSW’s Suppl. Req. for Aternative Relief as Part of Pending Mot. for Payment of Att’ys’ Fees
(“Relief Defs.’ Opp’n”) [Doc. # 1978] at 3.) For the reasons that follow, HSW’s motion is
GRANTED in part.

The Court modified its litigation stay order on December 20, 2018, [Doc. # 1070], to

allow HSW to advance claims for attorneys’ fees on the condition that HSW did “not seek to
recover from any asset of the Receivership Estate until assets of the Receivership Estate have
been liquidated such that the judgment in this case is fully secured and satisfied,” (see Ruling

on Relief Defs.’ Counsel’s Mots. for Fees and Withdrawal [Doc. # 1424] at 13). HSW obtained

an AAA Arbitration Consent Award against Relief Defendants for $1,021,000 and has

submitted proof of a domesticated judgment from the Connecticut Superior Court. (See
Notice of Filing of Foreign J., Ex. A [Doc. # 1925-1].) HSW now seeks “clarity from the Court
that the execution of a lien (with the understanding that any such lien would be junior to the

SEC’s judgment) would not constitute HSW seeking ‘to recover’ against the Receivership

Estate.” 1 (HSW Mot. at 2.) HSW does not explain how execution of a lien would not amount

to an effort to recover against the Receivership Estate. Alternatively, HSW requests “that the
Court . . . allow HSW to secure its secondary position and obtain benefit from the affirmative
steps the Court allowed it to take.” (Id. at 2.)

In lifting the litigation stay to allow HSW to bring an action against Relief Defendants,

the Court concluded that HSW would likely “suffer some prejudice if unable to litigate against

the Relief Defendants” as it was withdrawing from the case and “would be without a legal

mechanism for seeking payment of its fees if unable to litigate.” (Ruling on Relief Defs.’

As the Receiver notes, “execution” is defined as, “[t]he act of carrying out or putting into
effect” and “[j]udicial enforcement of a money judgment . . . by seizing and selling the
judgment debtor’s property.” (Receiver’s Opp’n at 2, n.2. (citing Execution, BLACK’S LAW
DICTIONARY (11th ed. 2019)).) Given HSW’s representation that it seeks only to “secure its
secondary position” as a creditor to the Receivership Estate, the Court construes HSW’s
motion to request permission to file, rather than execute, a lien. (See HSW’s Mot. at 2.)
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2

Counsel’s Mots. for Fees and Withdrawal at 12.) The Court opined that, “[g]iven the possible

dissipation of assets if and when the Court releases assets after the judgment has been
secured, HSC also faces a risk that it would not ever recover its unpaid fees from the Relief
Defendants if forced to wait to pursue its claims for payment until after the resolution of this
case.” (Id.)

These considerations lead the Court to conclude that HSW should be paid by the

Receiver after liquidation secures the SEC’s judgment but before the end of the
Receivership. 2 HSW is likely to suffer prejudice if its postponed fee payment is not accounted

for in this manner. HSW incurred fees for legal services rendered in this case and the Relief

Defendants, on whose behalf this work was performed, have consented to HSW being paid.

(Relief Defs.’ Opp’n at 3 (“To be clear, the Relief Defendants have no issue with HSW being
paid”).) Relief Defendants specifically request that the remaining amounts be disbursed
“once the judgment is satisfied and before the receivership estate is terminated.” (Id.)

Reflecting the consent of the Relief Defendants, the role HSW played in this proceeding, and

the related judgment that HSW obtained, the Court directs the Receiver to issue payment to
HSW of $1,021,000 from any Relief Defendants’ funds leftover after liquidation but before
the end of the Receivership. 3

The Court does not analyze the three-pronged test under SEC v. Wencke, 742 F.2d 1230,
1231 (9th Cir. 1984) because it is not lifting a stay on litigation but directing payment after
liquidation.
3 The Relief Defendants object in part to HSW’s motion because Ms. Ahmed is allowed to
select the assets used to fulfill this debt, and “[u]ntil the Second Circuit adjudicates the issues
of ownership, Ms. Ahmed cannot select the assets.” (Relief Defs.’ Opp’n at 2.) The source of
the payment, however, cannot be addressed until after liquidation.
2

3

For the foregoing reasons, HSW’s motion [Doc. # 1925] is GRANTED in part and the

Receiver is directed to issue payment to HSW of $1,021,000 after liquidation but before the
end of the Receivership to the extent Relief Defendants’ funds remain available.
IT IS SO ORDERED.

________________/s/______________________________
Janet Bond Arterton, U.S.D.J.

Dated at New Haven, Connecticut this 17th day of December 2021.

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