Securities and Exchange Commission v. Nadel et al

Filing 625

Unopposed MOTION for miscellaneous relief, specifically Limited Relief from Injunction by Richard T. Williams. (Attachments: #1 Exhibit 1, #2 Exhibit 2, #3 Text of Proposed Order Proposed Order)(Gaskill, Jason)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
Case No. 8:09-cv-87-T-26TBM
SECURITIES AND EXCHANGE
COMMISSION,

:
:
:
Plaintiff,
:
:
v.
:
:
ARTHUR NADEL et al.,
:
:
Defendants.
:
______________________________/

RICHARD T. WILLIAMS, III AND
KRISTIN P. SEIGWALD’S UNOPPOSED
MOTION FOR LIMITED RELIEF
FROM INJUNCTION

Pursuant to Rules 60 and 65, Fed. R. Civ. Proc., RICHARD T. WILLIAMS, III and
KRISTIN P. SEIGWALD (“Williams and Seigwald”) move for limited relief from the
Order of Injunction dated September 3, 2009 (“Injunction Order”) [Dkt. #190], as
subsequently modified by this Court pursuant to its January 29, 2010 Order (“Modification
Order”) [Dkt. #332] and state as follows:
BACKGROUND AND REQUEST FOR RELIEF
1.

On January 21, 2009, the United States Securities Exchange Commission

filed the instant action (the “Federal Action”). A receiver was appointed on January 21,
2009 to gather up all assets potentially obtained through the fraudulent schemes for the
benefit of all investors.
2.

On or about February 4, 2009, LOUIS PAOLINO (“Paolino”) filed a state

court action for claims overlapping those addressed in the Federal Action, which state court
action is styled Louis D. Paolino, Jr. v. Neil v. Moody and Christopher D. Moody, Case

No. 2009 CA 001876 in the Circuit Court in and for Sarasota County, Florida (the “State
Action”).
3.

On August 25, 2009, the Receiver in the Federal Action filed a Motion to

Enjoin State Court Proceeding and for Possession of Jewelry [Dkt. #177], which motion
sought to permanently enjoin the State Action to the extent the action sought to apply
claims against fraudulently obtained assets.
4.

On September 3, 2009, this Court entered the Injunction Order, stating that

“the state action must be enjoined.” As set forth in the Injunction Order, the State Action
created a realistic threat that Paolino would receive a windfall to the detriment of all other
investors. Paolino filed a Motion for Relief from Order/Clarification [Dkt. #191] and this
Court denied the motion, again stating that the purpose of the Federal Action was to ensure
that the assets of the Receiver’s estate were for the benefit of all investors, not just Paolino
[Dkt. #192].
5.

One of the properties Poalino sought to attack in the State Action is real

property commonly referred to as 1311 Tangier Way, Sarasota, Florida (the “Subject
Property”). The Subject Property was initially purchased by the Moodys on April 22,
2005. At that time, the Subject Property was encumbered by a purchase money mortgage
for $1.5 Million and a second mortgage for $380,000.

The Moodys subsequently

refinanced the second mortgage and added a new second mortgage for $975,000.
6.

In the summer/fall of 2009, Williams and Seigwald sought to purchase the

Subject Property as a short sale purchase (the encumbrances from the first and second
mortgage vastly exceeded the fair market value of the Subject Property).

7.

In connection with the purchase, Williams and Seigwald obtained a Consent

to Sale from the Receiver. A copy of the Consent to Sale is attached as Exhibit “1”. The
Receiver determined that the Subject Property had no equity which could be subject to
claims of those defrauded by the purported investment schemes.
8.

In reliance on the permanent injunction and the Consent to Sale, Williams

and Seigwald officially purchased the Subject Property on December 1, 2009.
9.

Despite having been permanently enjoined from attacking the Subject

Property, on January 21, 2010, Paolino filed an Emergency Motion for Modification of
Injunction in the Federal Action [Dkt. #322]. The Motion sought a modification of the
prior injunction permitting Paolino to file a Motion for Extension of Lis Pendens in the
State Action.
10.

Thereafter, on January 28, 2010, the Receiver filed a Response to the

Motion for Modification, raising concerns with the nature of the Motion, although offering
no opposition to the proposed request to the extent Paolino sought to extend the Lis
Pendens against the Subject Property [Dkt. # 329]. As expressly set forth in the Response,
the Receiver stated unequivocally that the secured debt against the Subject Property
significantly exceeded the actual value of the Subject Property. The Receiver permitted the
Subject Property to be sold to Intervenors in a short sale rather than take on the liabilities
and debts connected therewith. Once again, the Receiver admonished Paolino regarding
the continual interference with the Receiver’s efforts.
11.

On January 29, 2010, this Court entered the Modification Order, with the

sole modification allowing Paolino to seek an extension of the lis pendens against the
Subject Property.

12.

Paolino then proceeded with an Emergency Motion to Extend the Notice of

Lis Pendens over the Subject Property which was granted by the Court on February 3,
2010. A copy of the Extension Order is attached as Exhibit “2”.
13.

Due to Paolino’s Emergency Motion and efforts to extend the lis pendens

over the Subject Property notwithstanding the permanent injunction and Consent to Sale,
Williams and Seigwald sought and were granted intervention in the State Action.
14.

Since intervening to protect their interests, Williams and Seigwald have

been prohibited from taking action to address the lis pendens or bring the State Action to a
close due to the permanent injunction set forth by the Injunction Order.
15.

Because the Injunction Order permanently enjoined the State Action and has

not been modified except as provided by the Modification Order, Paolino’s claims in the
State Action remain forever barred.
16.

Accordingly, Williams and Seigwald seek limited relief from the Injunction

Order so that they extinguish the constructive trust claim as against their property.
WHEREFORE, RICHARD T. WILLIAMS, III and KRISTIN P. SEIGWALD
respectfully request entry of an Order providing limited relief from the Court’s September
9, 2009 Injunction Order to permit Williams and Seigwald to file a motion for summary
judgment in the State Action to extinguish the constructive trust claim against the subject
property and to permit the State Court to consider and rule upon said motion and otherwise
confirm the Injunction Order in all other respects.
LOCAL RULE 3.01(g) CERTIFICATE OF GOOD FAITH CONFERENCE
Undersigned counsel hereby certifies that he has conferred with Gianlua Morello,
Esq., counsel for the Receiver, who has confirmed that the Receiver neither consents nor

objects to the relief requested in this Motion to the extent that it does not require any
expenditure of receivership resources. Undersigned has further conferred with Scott A.
Masel, Esq. counsel for the Securities and Exchange Commission, who has confirmed that
the Commission does not oppose the above Motion.
Date: April 29, 2011

Respectfully Submitted:
ADAMS AND REESE LLP
1515 Ringling Blvd., Suite 700
Sarasota, FL 34236
Telephone: [phone]
Facsimile: [phone]
By:

/s/ Jason T. Gaskill
Jason T. Gaskill, Esq.
[e-mail]
Florida Bar No. 839051

CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on April 29, 2011, I electronically filed the foregoing
document with the Clerk of the Court using CM/ECF.

I also certify that the foregoing

document is being served this day on all counsel of record via transmission of Notices of
Electronic Filing generated by CM/ECF or in some other authorized manner for those
counsel or parties who are not authorized to receive electronically Notices of Electronic
Filing.
ADAMS AND REESE LLP
1515 Ringling Blvd., Suite 700
Sarasota, FL 34236
Telephone: [phone]
Facsimile: [phone]
By:

/s/ Jason T. Gaskill
Jason T. Gaskill, Esq.
[e-mail]
Florida Bar No. 839051