United States Securities and Exchange Commission v. Ahmed et al

Filing 2369

ORDER granting 2247 Motion for Attorney Fees; granting 2306 Motion for Cost and Fees; denying 2311 Motion to Compel; granting 2325 Motion for Extension of Time to File Response/Reply; denying 2349 Motion for Leave to File Sur-Reply. Signed by Judge Janet Bond Arterton on 10/24/2022. (Burman, A.)

Case 3:15-cv-00675-JBA Document 2369 Filed 10/25/22 Page 1 of 7

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 2014 GRANTOR RETAINED ANNUITY
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,

October 25, 2022

Relief Defendants.

RULING GRANTING RECEIVER’S THIRTEENTH AND FOURTEENTH MOTIONS FOR
FEES, RELIEF DEFENDANTS’ MOTION FOR EXTENSION OF TIME AND DENYING MS.
AHMED’S MOTION TO FILE A SUR-REPLY AND DEFENDANT’S MOTION SEEKING
DETAILS ON THE ESTABLISHMENT OF A QUALIFIED SETTLEMENT FUND
Receiver Stephen Kindseth moves for payment of fees and expenses incurred on
behalf of the Receivership Estate. (Mots. for Fees [Docs. ## 2247, 2306].) Defendant opposes,
(Def.’s Opp’ns [Docs. ## 2256, 2326]), and Relief Defendants join that opposition to the
extent that it does not conflict with their interests, (Relief Defs.’ Opp’ns [Docs. ## 2259,

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23271]). Plaintiff Securities and Exchange Commission (“SEC”) filed no briefing on the issue.
For the reasons that follow, the Receiver’s Thirteenth and Fourteenth Motions for Fees are
granted.
I.

Background
The Court assumes the parties’ familiarity with the facts and history of this case but

will briefly summarize the background relevant to this motion. The Receiver was appointed
on December 20, 2018. (Appointment Order [Doc # 1070].) The Appointment Order states
that the Receiver and persons retained to assist in his administration of the Receivership
Estate are “entitled to reasonable compensation and expense reimbursement from the
Receivership Estate,” subject to “prior approval of the Court” and according to
predetermined hourly billing rates. (Id. at 16.) The Receiver “shall apply to the Court for
compensation and expense reimbursement from the Receivership Estate” within forty-five
days after the end of each calendar quarter. (Id.) All such fee applications are “interim,”
“subject to cost/benefit and final reviews at the close of the receivership,” and subject to a
holdback in the amount of 20% of the amount of fees and expenses for each application, but
the “total amounts held back during the course of the receivership may be paid out at the
discretion of the Court as part of the final fee application.” (Id. at 15-16.) The Appointment
Order sets out certain requirements for the content of each fee application. (Id. at 17.)
II.

Discussion
The Receiver moves for the payment of fees for the following periods: 1) January 1,

2022 through March 31, 2022, (Thirteenth Mot. for Fees (“Thirteenth Mot.”) [Doc. # 22247]
at 2); and 2) April 1, 2022 through June 30, 2022, (Fourteenth Mot. for Fees (“Fourteenth
Mot.”) [Doc. # 2306] at 2). The Thirteenth Motion represents 390.6 hours worked by the

The Court grants Relief Defendants’ motion nunc pro tunc for an extension of time to reply
[Doc. # 2325], and their reply [Doc. # 2327] was considered for this Ruling.
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Receiver, Zeisler & Zeisler (“Z&Z”), and Verdolino & Lowey, P.C. (“V&L”)2 and seeks payment
in the amount of $113,007.38 in professional and paraprofessional fees, $11,625.00 in
Receiver’s fees, and reimbursement of actual and necessary expenses in the amount of
$2,013.14. (Thirteenth Mot. at 3.) The Fourteenth Motion represents 365.9 hours worked by

the Receiver, Z&Z, and V&L and seeks payment in the amount of $75,643.86 for the Receiver
and Z&Z’s services, $19,830.38 for V&L’s services, and $711.58 in actual and necessary
expenses of the Receiver and V&L. (Fourteenth Mot. at 3.)
The motions “reflect the hours worked by the Receiver and staff at Z&Z and V&L at
the hourly rates applicable at the time that they rendered their services, as modified by the
significant discounts provided by the Receiver, Z&Z, and V&L.” (Fourteenth Mot. at 3.)3
Additionally, the Receiver states that the fee applications
take into account all relevant circumstances and factors as set
forth in the Connecticut Rules of Professional Conduct and the
SEC Guidelines, including the nature of the services performed,
the amount of time spent, the experience and ability of the
professionals and paraprofessionals working on this
engagement, the novelty and complexity of the specific issues
involved, the time limitations imposed by the circumstances,
and the responsibilities undertaken by the Receiver, Z&Z, and
V&L pursuant to this Court’s orders.
(Id. at 3-4.) The applications include narrative descriptions of the services provided in the
time records and summaries of the Receiver’s administration of the Receivership Estate. (Id.
at 4.) The Receiver does not seek “reimbursement for secretarial, word processing,
proofreading or document preparation expenses (other than by professionals or
paraprofessionals), data processing and other staff services (exclusive of paraprofessional
services, or clerical overtime).” (Id.) The fee applications reflect the substantial public service
The Court previously approved the Receiver’s request to employ V&L as tax professionals.
(V&L Employment Order [Doc. # 2193].)
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3 Where the

Receiver’s motions contain significant overlap in content, the Court cites only to
the Fourteenth Motion for Fees.
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discounts determined at the time of the Receiver’s appointment, including a twenty-five
percent discount to regularly applicable hourly rates for all legal professionals and
paraprofessionals. (Id.) In accordance with the SEC Guidelines, the Receiver and Z&Z
categorized fees incurred by certain “activity categories.” (Id. at 6.) The Receiver provided a
detailed description of the activities of the Receivership Estate during each billing period.
(Id. at 13-24; Thirteenth Mot. at 13-25.)
Defendant’s oppositions largely either repeat prior unsuccessful arguments4 or raise
issues that are not relevant to the Court’s consideration of this motion, such as Defendant’s
objection to the Receiver’s liquidation plan [Doc. # 2022] (the “Liquidation Plan”). (Def.’s
Opp’n to Thirteenth Mot., at 4-8.)5 Likewise, Defendant repeats his position that the
Receiver’s fees should be paid from within the Judgment. (Def.’s Opp’n to Thirteenth Mot., at
3-4.) Again, the Court has addressed this argument. (See [Doc. # 2028] (reserving a decision
on this argument until after liquidation).) Finally, Defendant argues that the Receiver may
be compensated for time spent defending fee motions, which the Court has already explained
is a permissible activity to bill for. (Def.’s Opp’n to Thirteenth Mot., at 12; see Second Fee
Ruling [Doc. # 1714] (explaining that the Receiver can seek compensation for time spent
defending fee motions).)
However, Defendant does raise some issues specific to this fee request. First,
Defendant argues that the Court should not authorize the use of funds from the Qualified
Settlement Account (“QSF”) to pay the fees because the Receiver was not authorized to create
such an account. (Def.’s Opp’n to Fourteenth Mot., at 14-15.) However, Defendants seem to
misunderstand the nature of the status of the QSF issue to date; the Receiver is not creating

See, e.g., Def.’s Opp’n to Receiver’s Fourteenth Mot. at 1 (“The Defendant fully incorporates
his prior oppositions.”).
4

For example, Defendant also raises several issues related to taxation and V&L’s handling of
tax matters. (Def.’s Opp’n to Thirteenth Mot., at 9-11; Def.’s Opp’n to Fourteenth Mot., at 1417.)
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a QSF account with V&L but is instead investigating the legal question of whether conditions
giving rise to a QSF existed once the liquidation order was entered.6 The Receiver’s and V&L’s
work on analyzing this issue is certainly compensable work.
More broadly, Defendant generally complains that the Receiver has not informed him
and Relief Defendants about work on tax issues. (Def.’s Opp’n to Fourteenth Mot., at 9-10.)
This complaint is not relevant to the propriety of the Receiver’s fee motions. The Court
directed the Receiver retain a tax professional to render “an objective assessment” of the tax
position of the Receivership Estate, and the Phase 1 Report’s tax addendum satisfies this
direction. (Id. at 18.) To the extent Defendants disagree with the conclusions of the Receiver
and his professionals relating to the estate’s tax liability, Defendants can raise those concerns
in their responses to the Receiver’s Phase 1 Report.
Defendant does not dispute specific time entries in his opposition to the Thirteenth
Motion for fees, but he does so in opposition to the Fourteenth Motion for fees. Defendant
argues that several instances of the Receiver and V&L both billing for time spent in
discussion with each other amount to improper duplicate billing. (Def.’s Opp’n to Fourteenth
Mot., at 14.) However, as the Receiver argues, if multiple people are involved in a matter,
there is nothing untoward in them all billing for their time. (Receiver’s Reply [Doc. # 2340]
at 2.) Rather than any malfeasance, the fact that the invoices rarely show concurrent billing
reflects the Receiver’s and Z&Z’s conscientious approach to billing. (Id.)
Defendant next takes issue with several entries reflecting communication with the
SEC and IRS. (Def.’s Opp’n to Fourteenth Mot., at 10-11.) Defendant alleges that these
communications violate the Court’s protective order [Doc. # 2197] prohibiting the Receiver
from disclosing any of Defendant’s or Ms. Ahmed’s tax information. (Def.’s Opp’n to
Fourteenth Mot., at 14.) As the Receiver explained, at no point was the protective order
For this reason, Defendant’s motion seeking details on the establishment of a QSF [Doc. #
2311], which Relief Defendants joined [Doc. # 2323], is denied.
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breached or were the IRS and SEC provided with non-public information. (Receiver’s Reply
[Doc. # 2340] at 6-7.) Therefore, this time was appropriately billed.
Finally, Defendant and Relief Defendants generally dispute, without identifying any
specific entries, time billed that relates to Defendant and Ms. Ahmed’s divorce proceeding.
(Def.’s Opp’n to Fourteenth Mot., at 11-13; Relief Defs.’ Opp’n to Fourteenth Mot. at 12-13.)
Defendant notes that “[t]he Receiver is . . . tasked with managing and liquidating assets in
this case.” (Id. at 12.) Because Defendant has represented to the Court that he has no
significant assets beyond those held in the Receivership Estate, his pending Dissolution
Agreement, which seeks to transfer more than $87 million from Defendant to Ms. Ahmed,
significantly affects the management and liquidation of assets. (See Receiver’s Notice
Regarding Defendants’ Apparent Failure to Comply with the Appointment Order [Doc. #
2248], at 2-4.) The precedent that Defendant cites does not contradict this assessment.
Defendant relies on American Airlines, Inc. v. Block, 905 F.2d 12, 14 (2d Cir. 1990) (Def.’s
Opp’n at 12), where the Second Circuit held that “federal courts may properly abstain from
adjudicating [matrimonial] actions in view of the greater interest and expertise of state
courts in this field.” Id. at 14. However, in this instance the Court is not attempting to
adjudicate the Ahmeds’ divorce or any related family law matters. Additionally, this case is
brought by a plaintiff (SEC) who is not a party to the divorce. See Mochary v. Bergstein, 42
F.4th 80, 88-89 (2d Cir. 2022) (“[a]s the district court correctly concluded, because this case
does not involve issuing or modifying [a matrimonial] decree, and is brought by a third-party
plaintiff, the domestic relations exception does not apply.”). Therefore the domestic relations
abstention doctrine does not apply, and this time is deemed appropriately billed.
I.

Conclusion
For the foregoing reasons, the Receiver’s Thirteenth and Fourteenth motions for fees

[Docs. ## 2247, 2306] are GRANTED, Relief Defendants’ motion for an extension of time to
reply [Doc. # 2325] is GRANTED, Ms. Ahmed’s motion for leave to file a sur-reply [Doc. #
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2349] related to the Receiver’s Fourteenth motion is DENIED, and Defendant’s motion
seeking details on the establishment of a QSF [Doc. # 2311] is DENIED.

IT IS SO ORDERED.

___________________/s/_________________________

Janet Bond Arterton, U.S.D.J.
Dated at New Haven, Connecticut this 25th day of October, 2022

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