United States Securities and Exchange Commission v. Ahmed et al

Filing 2436

ORDER denying 1703 Motion to Find Violation of Court Order; denying 1725 Motion to Account for Allegedly Forfeited Assets. Signed by Judge Janet Bond Arterton on 2/2/2023. (Anderson, Colleen)

Case 3:15-cv-00675-JBA Document 2436 Filed 02/02/23 Page 1 of 4

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

UNITED STATES SECURITIES AND EXCHANGE
Civil No. 3:15cv675 (JBA)
COMMISSION,
Plaintiff,
February 2, 2023
v.
IFTIKAR AHMED,
Defendant, and

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,
Relief Defendants.

RULING DENYING MOTION TO FIND VIOLATION OF COURT ORDER AND TO ACCOUNT
FOR ALLEGEDLY FORFEITED ASSETS
Defendant Iftikar Ahmed seeks to have Oak Management Company (“Oak”) found in

violation of the Court’s litigation stay order as a result of its motion in state court to confirm
its arbitration award against Mr. Ahmed. [Doc. # 1703]. Oak denies that its state court motion

violated this Court’s litigation stay, and argues that that its motion was within the scope of

the Court’s initial lift of the stay permitting the arbitration to proceed against Mr. Ahmed.
[Doc. # 1721].

Case 3:15-cv-00675-JBA Document 2436 Filed 02/02/23 Page 2 of 4

Separately, Mr. Ahmed also moves for the Court to either transfer assets he believes

Oak forfeited to the SEC to the Receivership Estate or to offset the judgment by their value,
arguing that Oak admitted in its response to his prior motion [Doc. # 1721] that it forfeited

assets covered by the judgment to the SEC, and that the SEC has thus already received partial
satisfaction of its judgment with those assets. [Doc. # 1725]. Both the SEC and Receiver assert
that Mr. Ahmed’s motion is without merit and premised on a misunderstanding of Oak’s
filing. [Docs. ## 1733, 1736].
Discussion

The Court assumes familiarity with the background of this case. Relevant to this

motion, this Court entered a stay of “civil legal proceedings” to “obtain possession of
property of the Receivership Estate” or “against any of the Defendants,” and enjoining the
commencement or continuation of any such proceeding without leave of Court. (Order

Appointing Receiver [Doc. # 1070].) On May 21, 2019, the Court lifted the litigation stay “for

the limited purpose of permitting Oak to pursue the arbitration it seeks to bring against Mr.

Ahmed” for fraud directed towards Oak funds. (Order Lifting the Litigation Stay [Doc. #

1167] at 13.) Oak obtained an arbitration award against Mr. Ahmed in the amount of
$56,673,513 plus interest; Mr. Ahmed filed a motion to vacate the arbitration award on
September 22, 2020, and Oak cross-moved to confirm the award on December 8, 2020.
(Receiver’s Response at 3.)
A.

Motion to Find Oak in Violation of Court Order

Defendant argues that Oak is “in violation of this Court’s stay of litigation order and

has affirmatively proceeded against Receivership Assets” because Oak made no separate

request to move for confirmation of the award before doing so, and because allowing the

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proceedings to continue would implicate Receivership Assets. (Def.’s Mot. at 3.) 1 Oak

counters that cross-moving to confirm the arbitration award “does not amount to the filing
of a new action” because in Connecticut, the confirmation of an arbitral award does not

constitute a new and separate civil case that would be covered by the litigation stay. (Oak’s

Response at 3.) Further, Oak points out that it was Mr. Ahmed who instituted the postarbitration proceedings and prompted its cross-motion by filing his motion to vacate the
arbitration award. (Id.) As for the contention that the arbitration award will imperil forfeited

assets, Oak represents that the damages Oak seeks, and that the arbitrator awarded, in the
state court case do not flow from the same cause of action as the SEC’s case in this matter.

(Id. at 4.) According to Receiver, Oak’s counsel has represented to him that it “has no

intention of moving against Receivership Assets if the Award is confirmed absent leave of
this Court or the termination of the Asset Freeze.” (Receiver’s Response at 4.)

Oak is correct that “an application to confirm an arbitration award” is neither “a civil

action” nor, “by definition . . . a separate civil action.” Das v. Rodgers, 47 Conn. App. 242, 247
(1997). Seeking to confirm an arbitration award is within the scope of “pursu[ing] the

arbitration [Oak sought] to bring against Mr. Ahmed,” (Order Lifting the Litigation Stay at

13) and does not violate the Court’s Order because “all that confirmation does is arm the

already winning party in the arbitration with a variety of remedies to enforce the

judgment—and, by extension, the arbitration award.” Local 807 Labor-Mgmt. Health &
Pension Funds v. Showtime on the Piers, LLC, Docket No. 18-CV-3642 (ARR), 2019 U.S. Dist.

LEXIS 7294, at *5 (E.D.N.Y. Jan. 14, 2019).

Defendant’s motion also argued that the arbitration award should not be confirmed until
his appeal of this Court’s order lifting the litigation stay to permit the arbitration to proceed
was decided by the Second Circuit. That argument is now moot, as the appeal has been
withdrawn. See United States Securities and Exchange Comission v. Ahmed, No. 19-2974,
Order Approving Stipulation to Withdraw Appeal [Doc. # 230] (2d. Cir. Feb. 22, 2021.)
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B.

Motion to Account for Assets

The basis for the motion regarding the allegedly “forfeited” Oak assets is a misreading

of Oak’s opposition to Defendant’s motion, in which Oak stated that “the forfeited assets and
damages obtained by the SEC in this action are not the same damages that OMC sought or

that the arbitrator awarded in the arbitration action.” (Oak’s Response at 4.) While Mr.
Ahmed reads the phrase “obtained by” to imply that the SEC had affirmatively taken

possession of Oak assets that were subject to the asset freeze entered by this Court, both the

Receiver [Doc. # 1736] and the SEC [Doc. # 1733] have clarified in their responses that this
is not so, and that the disputed statement is simply meant to distinguish the assets covered

by the judgment in this case from the assets at issue in the separate arbitration. Given this

clarification, Defendant’s motion is without merit.
Conclusion

For the reasons stated above, Defendant’s motions to find Oak in violation of court

order [1703] and to account for Oak’s assets [1725] are DENIED.

IT IS SO ORDERED.

______________/s/___________________________

Janet Bond Arterton, U.S.D.J.

Dated at New Haven, Connecticut this 2nd day of February, 2023

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