Zayed v. Associated Bank, N.A.
ORDER denying 173 Motion to Exclude Expert Testimony; denying 175 Motion for Sanctions; granting 177 Motion for Summary Judgment; denying 179 Motion to Exclude Expert Testimony; denying 181 Motion to Exclude Expert Testimony(Written Opinion) Signed by Senior Judge David S. Doty on 1/31/2017. (DLO)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 13-232(DSD/SER)
R.J. Zayed, In His Capacity as
Court-Appointed Receiver for the
Oxford Global Partners, LLC,
Universal Brokerage, FX, and
Other Receiver Entities,
Associated Bank, N.A.,
William W. Flachsbart, Esq. and Flachsbart & Greenspoon, 333
N. Michigan Ave., Suite 2700, Chicago, IL 60601; D. Timothy
McVey, Esq. and McVey & Parsky LLC, 30 N. LaSalle, Suite 2100,
Chicago, IL 60602; Keith A. Vogt, Esq. and Takiguchi & Vogt,
LLP, 1415 West 22nd Street, Tower Floor, Oak Brook, IL 60523
and Brian W. Hayes, Esq., Tara C. Norgard, Esq. and Carlson
Caspers Vandenburgh Lindquist & Schuman PA, 225 South 6th
Street, Suite 4200, Minneapolis, MN 55402, counsel for
Charles F. Webber, Esq and Faegre Baker Daniels LLP, 90 South
7th Street, Suite 2200, Minneapolis, MN 55402 and Stephen M.
Medlock, Esq. and Mayer Brown, LLP, 1999 K Street, NW,
Washington, DC 20006, counsel for defendant.
This matter is before the court upon the motions to exclude
expert testimony by Receiver R.J. Zayed and the motions for summary
judgment, sanctions, and to exclude expert testimony by defendant
Based on a review of the file, record, and
proceedings herein, and for the following reasons, the court grants
the motion for summary judgment and denies the remaining motions as
The background of this matter is fully set forth in the
court’s September 30, 2013, and August 4, 2015, orders, and the
court recites only those facts necessary to resolve the instant
motions. See ECF Nos. 50, 78. This receivership action arises out
The scheme principals included, among others, Trevor
Cook, Patrick Kiley, and Chris Pettengill.1
Compl. ¶ 1, ECF No.
42. The scheme purported to guarantee investors a return in excess
of 10% annually through foreign currency trading with Crown Forex,
S.A., a Swiss company.
Id. ¶ 3.
In furtherance of the scheme, the
Receivership Entities opened accounts with multiple financial
institutions, including Associated Bank. The Receiver alleges that
Lien Sarles, a former vice president of Associated Bank, had
knowledge of and assisted in the fraud.
principals began in December 2007 or January 2008.
Sarles Decl. ¶
Kiley was referred to Sarles by Michael Behm, Sarles’s step-
brother, for commercial banking services.
During the course
of the banking relationship, Sarles occasionally socialized with
Cook and Kiley used several corporate entities to
perpetuate the scheme.
These entities include Oxford Global
Partners, LLC; Oxford Global FX, LLC; Oxford FX Growth, L.P.;
Universal Brokerage FX Management, LLC; Market Shot, LLC; and other
entities controlled by them. See Compl. ¶ 2. The court will refer
to the entities as “Receivership Entities.”
Sarles Dep. at 64:16-20; 174:10-175:2.
with Cook, Pettengill, and others, Cook quoted lines, such as
“greed is good,” from the movies Wall Street and Boiler Room, but
there is no evidence that Sarles understood that these comments
referred to the ongoing Ponzi scheme.
See Pettengill Dep. at
In 2008, Sarles personally assisted Kiley in opening several
commercial accounts, including account #1705 registered to Crown
Forex LLC, the domestic counterpart to Crown Forex, S.A.
Decl. ¶ 9; see Greenspoon Decl. Ex. 21, ECF No. 235.
Julia Smith were signatories on the account.
See Greenpoon Decl.
The Receiver alleges that the Crown Forex account was
integral to the Ponzi scheme.
Specifically, investors would
deposit money into the account, which was then transferred to other
Associated Bank accounts and accounts at other institutions for
personal use by the scheme principals.
Compl. ¶ 33.
Sarles opened the Crown Forex account, despite lacking the
necessary Secretary of State registration documents.
Sarles testified that he opened the account with the
understanding that Kiley would provide the documents later.
Sarles Dep. at 109:6-16.2
Sarles, however, did not follow up to
obtain the necessary documentation. He was later informed that the
The parties do not dispute that Cook and Kiley provided the
necessary registration documents for their other accounts at the
Bank. Sarles Decl. ¶¶ 13-14.
Bank would close or freeze the Crown Forex account for lack of
proper documentation, but that never occurred. Sarles Decl. ¶¶ 17,
investment account, but the account opening forms indicate that it
was a “Checking/Money Market” account.3
See id. ¶ 14; Sarles Dep.
at 120:1-121:21; Greenspoon Decl. Ex. 21. Although the Crown Forex
account was set up to wire investment money to the foreign Crown
Forex entity for investment purposes, no international transfers
appear to have occurred.
Sarles Dep. at 120:24-121:21;
Greenspoon Decl. Ex. 22 at 34830; Id. Ex. 32. Sarles also assisted
Cook in opening several other accounts on which Cook was the
signatory, including account #2331, whichwas registered to Oxford
Global FX, LLC.
Sarles Decl. ¶ 10; Greenspoon Decl. Ex. 25 at
On April 19, 2013, the Receiver filed this action, alleging
claims for aiding and abetting fraud, aiding and abetting breach of
fiduciary duty, aiding and abetting conversion, and aiding and
abetting false representations and omission against Associated Bank
based on Sarles’s relationship with Cook and the other scheme
Associated Bank now moves for summary judgment.
Natalya Epsey completed the accounting opening forms. See
Greenspoon Decl. Ex. 21.
There is no evidence that Sarles
instructed Epsey to label the account as a “checking/money market”
account rather than an investment account, nor does the Receiver
allege that Epsey has actual knowledge of the Ponzi scheme.
Standard of Review
“The court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed. R. Civ.
P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material only when its resolution affects the outcome of
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
A dispute is genuine if the evidence is such that it could
cause a reasonable jury to return a verdict for either party.
id. at 252 (“The mere existence of a scintilla of evidence in
support of the plaintiff’s position will be insufficient ....”).
On a motion for summary judgment, the court views all evidence
and inferences in a light most favorable to the nonmoving party.
Id. at 255.
The nonmoving party, however, may not rest upon mere
denials or allegations in the pleadings but must set forth specific
facts sufficient to raise a genuine issue for trial.
U.S. at 324.
A party asserting that a genuine dispute exists - or
cannot exist - about a material fact must cite “particular parts of
materials in the record.”
Fed. R. Civ. P. 56(c)(1)(A).
plaintiff cannot support each essential element of a claim, the
court must grant summary judgment because a complete failure of
proof regarding an essential element necessarily renders all other
Celotex, 477 U.S. at 322-23.
Aiding and Abetting Claims
To state a claim for aiding and abetting under Minnesota law,
a plaintiff must show that (1) a primary actor committed a tort
that caused injury to the plaintiff, (2) the aider and abettor knew
that the primary actor’s conduct constituted a tort, and (3) the
aider and abettor substantially assisted or encouraged the primary
actor in committing the tort.
Witzman v. Lehrman, Lehrman & Flom,
601 N.W.2d 179, 187 (Minn. 1999); see also In re Temporoamandibular
Joint (TMJ) Implants Prods. Liab. Litig., 113 F.3d 1484, 1495 (8th
Cir. 1997) (same).
The elements of knowledge and substantial
assistance are analyzed in tandem.
Witzman, 601 N.W.2d at 188.
“Where there is a minimal showing of substantial assistance, a
greater showing of [knowledge] is required.”
internal quotation marks omitted).
In determining whether the requisite showing of knowledge and
assistance exists the court will consider “[f]actors such as the
relationship between the defendant and the primary tortfeasor, the
nature of the primary tortfeasor’s activity, the nature of the
assistance provided by the defendant, and the defendant’s state of
Law of the Case
The Receiver argues that the facts as recited by the Eighth
Circuit Court of Appeals in its previous opinion in this matter
preclude summary judgment.
See Zayed v. Associated Bank, 779 F.3d
727 (8th Cir. 2013).
The law is clear, however, that a court is
not bound by the facts recited by an appellate decision at the
pleading stage when deciding a summary judgment motion.
Richmond, 370 F.3d 723, 728 (8th Cir. 2004). Therefore, the Eighth
Circuit’s previous decision does not preclude summary judgment.
“An aider and abettor’s knowledge of the wrongful purpose is
a crucial element in aiding or abetting cases.”
E-Shops Corp. v.
U.S. Bank Nat’l Ass’n, 678 F.3d 659, 663 (8th Cir. 2012) (citation
and internal quotation marks omitted). “[W]here the conduct is not
a facial breach of duty, courts have been reluctant to impose
liability on an alleged aider and abettor for anything less than
Witzman, 601 N.W.2d at 188.
In other words, “[w]hile
knowledge may be shown by circumstantial evidence, courts stress
that the requirement is actual knowledge and the circumstantial
evidence must demonstrate that the aider-and-abettor actually knew
of the underlying wrongs committed.”
Varga v. U.S. Bank Nat’l
Ass’n, No. 12-3180, 2013 WL 3338750, at *6 (D. Minn. July 2, 2013)
(emphasis in original) (citations and internal quotation marks
omitted); see also El Camino Res. Ltd. v. Huntington Nat’l Bank,
Restatement definition of aiding and abetting, that bank must have
more than “strong suspicion of wrongdoing”).4
knowledge, rather than actual knowledge, may also suffice.
tortfeasor’s conduct is clearly tortious or illegal, some courts
constructive knowledge that the conduct was indeed tortious.”).
But the Witzman court only noted in dicta, citing a Second Circuit
case, that some courts hold that constructive knowledge can be
sufficient in certain circumstances.
Even if Minnesota courts
would apply a standard of constructive knowledge, it does not apply
here because the scheme was not clearly tortious or illegal to
those not directly involved; indeed, the scheme involved multiple
ostensibly legitimate transactions, and went undiscovered for three
See id. (“[Defendant] may have reasonably believed that
these allegedly tortious dealings were legitimate ....”). Further,
the two-year banking relationship between the scheme principals and
the Bank, including Sarles, cannot be characterized as a long-term
or in-depth relationship.
See id. (applying an actual knowledge
standard where defendant had served as torfeasor’s accountants for
Minnesota has adopted the Restatement definition of aiding
and abetting. Witzman, 601 N.W.2d at 187.
over three decades).
Therefore, in order to be found liable, the
Bank must have actually known of the Ponzi scheme.5
The Receiver argues that the Bank, via Sarles, actually knew
about the Ponzi scheme because Sarles (1) had a close relationship
with Cook; (2) employed strategies to avoid detection when opening
furtherance of the scheme; (5) wrongfully approved fund withdrawals
for non-signatories; and (6) tricked individuals into signing blank
forms. The Receiver also argues that the Bank, apart from Sarles’s
knowledge, had actual knowledge because it failed to investigate
suspicious activity and failed to follow through on investigations
already in progress.
As discussed below, these allegations are
either unsupported or contradicted by the record, and no reasonable
jury could infer that Sarles or anyone else at the Bank had actual
knowledge of the Ponzi scheme.
The Receiver urges the court to frame the aiding and
abetting analysis in terms of each individual tort alleged in the
complaint, that is, to ask whether the Bank knew about and
substantially assisted conversion, breach of fiduciary duty, fraud,
and negligent misrepresentation rather than the Ponzi scheme
But this is a distinction without a difference.
Although the court refers to the complaint in determining whether
there is a genuine issue of material fact, each of the counts in
the complaint relies exclusively on the conduct underlying the
Therefore, there must be evidence indicating
knowledge and substantial assistance of the Ponzi scheme in order
for the individual counts to survive summary judgment.
Close Relationship with Cook
relationship with Cook” as evidence of his actual knowledge of the
Pls.’ Mem. Opp’n at 5.
But this characterization is a
stretch - the record demonstrates nothing more than a normal client
relationship that included occasional socializing. See Sarles Dep.
at 64:16-20; 174:10-175:2.
The Receiver contends that, as further evidence of the close
relationship, Sarles deleted a portion of an email conversation
with Cook to mask Cook’s gambling habits.
See Greenspoon Ex. 12.
But a review of the full email, which the Receiver fails to cite,
shows that the deleted text was a request from Cook for the
balances of two accounts and Sarles’s reply in which he asked Cook
to recommend casinos to visit in Panama.
See Ex. 12, ECF No. 244-
Read as a whole, the email is innocuous, and does not
establish an unusually close bond between Cook and Sarles.
The Receiver argues that Sarles must have had actual knowledge
of the scheme because he engaged in detection-avoidance strategies
when opening the Crown Forex LLC account.
Secretary of State documentation.
The Receiver points to
Although Sarles admits that he
The Bank did not attach their exhibits to a declaration, so
the court will refer to its exhibits by ECF number.
necessarily follow that he was trying to avoid scrutiny by doing
Nothing in the record contradicts Sarles’s testimony that he
Further, Sarles’s reliance on Kiley’s statement was reasonable
given that proper documentation had been provided for the other
The Receiver next alleges that Sarles falsified the account
opening documents by indicating that the account was a money market
or checking account rather than an investment account.
not Sarles, completed the account opening documents, and she did so
by selecting what she thought was the best match from a prepopulated list of options.
Epsey Dep. at 152:18-153:4.
Receiver does not allege that Epsey had any knowledge of the Ponzi
scheme, nor is there evidence that Sarles directed Epsey to fill
out the form in a certain way.
The Receiver also argues that Sarles attempted to avoid
scrutiny by opening the account in the name of Crown Forex LLC, a
domestic entity, rather than Crown Forex, S.A., a foreign entity.
But the Receiver does not dispute that Sarles was following bank
policy by opening the account in the name of a domestic entity.
Sarles Dep. at 69:6-13; 71:8-11.
Morever, the Receiver does not
explain how opening the account in the name of a domestic entity
subjected the account to less scrutiny.
Indeed, based on the
inquiries discussed below, it appears that the Bank did in fact
scrutinize the account.
Finally, the Receiver cites to the fact that Sarles, in
violation of bank policy, overrode identification check failures
when opening accounts for Crown Forex and Cook’s other business
See Greenspoon Decl. Ex. 25 at 59570-75.
undisputed, however, that such overrides were common at the bank,
despite bank policy to the contrary.
See Kitowsky Dep. at 121:11-
122:9. At most, these facts indicate negligence on the part of the
Bank in maintaining adequate policies and procedures.7
Deflecting Internal Investigations
The Receiver also contends that Sarles deflected the internal
investigation of Crown Forex’s wire activity and address, thereby
establishing his actual knowledge of the fraud.8
BSA/AML compliance department requested more information about
Crown Forex’s business because of “a lot of wire activity on the
Greenspoon Decl. Ex. 22 at 34832.
Sarles replied that
The Comptroller of the Currency entered a monetary civil
penalty of $500,000 against the Bank for an inadequate Bank Secrecy
Act and Anti-Money Laundering program. See Ex. 15, ECF No. 244-19.
investigation,” the record shows that the instances cited were
emails requesting clarification or additional information.
The BSA/AML department is responsible for ensuring
compliance with the Bank Secrecy Act and money laundering statutes.
Crown Forex “manages a global fund” and “[w]e knew there would be
a lot of wire activity from the start.”
Id. at 34830.
There is no
Sarles’s response. The Receiver argues that Sarles’s statement was
untrue because he testified that he never discussed the level of
expected wire activity with any of the scheme principles.
Sarles Dep. at 94:15-96:22.
But Sarles also testified that he
looked to previous accounts opened by the scheme principals to
gauge how much wire activity expect and noted frequent wire
Id. at 124:4-18.
Thus, Sarles’s response to the
compliance department was neither false nor a deflection.
The Receiver also alleges that Sarles lied to deflect an
inquiry into Crown Forex’s address.
Crown Forex’s listed address
was 5413 Nicollet Avenue, but another bank discovered that this
address was incorrect and notified the Bank of the discrepancy.
See Greenspoon Decl. Ex. 21; id. Ex. 23.
Ryan Rasske, the Bank’s
Director of Risk and Financial Crime, forwarded the inquiry to
Joanne Alberts who contacted Sarles.
See Greenspoon Decl. Ex. 23.
Sarles informed Alberts that the Nicollet address was an old
address and that Crown Forex had moved to 1900 La Salle Avenue.
Although the Receiver argues that Sarles lied in his
response, there is no evidence that Sarles knew the address to be
false or even that it was false when Cook submitted the account
See id. Ex. 21.
Further, there is no evidence that
Sarles had a duty to independently verify Crown Forex’s address.
Sarles Dep. at 112:14-113:17.
Finally, the Receiver cites to an email from Rasske asking
Sarles questions about Kiley’s and Julia Smith’s relationship to
the Crown Forex account.
See Greenspoon Decl. Ex. 24.
record does not reflect whether Sarles responded to Rasske’s
questions or whether Rasske continued to pursue the inquiry. Under
these circumstances, it is not reasonable to infer that Sarles
attempted to deflect “investigations” into Crown Forex.
Meetings in Furtherance of the Scheme
furtherance of the scheme, but the record again fails to support
Although Sarles attended meetings with the scheme
principals, during which they engaged in banter about financial
industry greed, there is no evidence that Sarles understood them to
be disclosing or discussing the Ponzi scheme.
investment seminar organized by the scheme principals as evidence
that he assisted in the scheme’s recruiting efforts.
Pettengill Dep. at 224:9-226:17.
Lastly, the Receiver cites Sarles’s attendance at a meeting in
April or May of 2008 where Cook, Kiley, and others allegedly
discussed propping up bankrupt Crown Forex, S.A. by illegally re-
Pettengill’s testimony is the only evidence
that this alleged meeting occurred. See Pettengill Dep. at 172:10176:6.
Even assuming it occurred, the testimony does not support
the Receiver’s characterization of the meeting.
Id. at 180:15-181-25.
The meeting participants did not
discuss the fact that Cook’s illegal strategy to re-paper the
account was different than the strategy proposed by Cook’s lawyers.
Id. at 183:5-184:10.
Pettengill testified that the illegality of
the strategy was implied.
The court has carefully reviewed
and considered in full Pettengill’s testimony, and it does not
believe that a jury could reasonably infer that Sarles actually
knew about the Ponzi scheme based on the alleged meeting.10
most, Pettengill’s testimony supports a weak inference that Sarles
should have inquired further into the Crown Forex account.
further infer, based upon that weak inference, that Sarles had
actual knowledge is a step too far.
See ACT Inc. v. Sylvan
Learning Sys., 296 F.3d 657, 667 (8th Cir. 2002) (“But the supposed
evidence to which [plaintiff] points requires us to draw inference
The Bank has moved for an adverse inference that the 2008
meeting did not occur because the Receiver should be held
responsible for Cook and Kiley’s alleged destruction of evidence
relating to the meeting.
Because the court fully considered
Pettengill’s testimony and concluded that it does not create a
genuine issue of material fact, the motion will be denied as moot.
upon inference in order to conclude there might be a material fact
issue lurking somewhere.
We decline to do so ....”).
Wrongful Fund Withdrawals
The Receiver next argues that Sarles must have known about the
scheme because he authorized transfers from the Crown Forex account
to Cook’s Oxford Global account without proper authorization from
a Crown Forex signatory.
Although transaction receipts show that
Sarles approved three transfers from the Crown Forex account to
requested by non-signatories.
See Greenspoon Ex. 27.
Julia Smith, a signatory on the Crown Forex account, requested at
least two of the transfers.11 See id.; Medlock Decl. Ex. 1, ECF No.
The Receiver also claims that Sarles authorized Cook, who was
not a signatory on the Crown Forex account, to transfer $600,000
from that account to his own account.
Again, this claim is
contradicted by the record; the $600,000 transfer was from the
Oxford Global account on which Cook was a signatory, not the Crown
See Greenspoon Decl. Ex. 28 at 51593.12
The record does not indicate who requested the third
The email references a previous transfer from the Crown
Forex account to the Oxford Global account, but only to confirm
that the previous transfer was complete and that the funds were
available for withdrawal from the Oxford Global account. See id.
at 51591. There is no evidence that the transfer from the Crown
Forex account was requested by an unauthorized person.
authorized transfers from the Crown Forex account.
Dishonestly Obtaining Signatures
The Receiver also argues that Sarles had actual knowledge of
the scheme because he tricked Leo Domenichetti, who worked for the
Receiver’s assertion, he did not testify that the forms were blank.
See Domenichetti Dep. at 150:13-155:14; 179:2-181:25.
Domenichetti testified that he could not remember whether certain
areas of the form he signed were blank or completed.
Viewing all the evidence in the light most favorable to the
receiver, the evidence, at most, shows that Sarles occasionally
socialized with Cook, that he failed to obtain the necessary
documentation in opening one account, and that he may have failed
to answer one internal inquiry.
This evidence, viewed in context,
does not support a finding that Sarles actually knew about the
fraudulent scheme, nor is it sufficient to create a genuine issue
of material fact. See Frieze v. Boatmen’s Bank of Belton, 950 F.2d
538, 541 (8th Cir. 1991) (“Although [the nonmoving party] is
entitled to the benefit of all reasonable inferences, an inference
is reasonable only if it can be drawn from the evidence without
resort to speculation.”).
Other Associated Bank Employee’s Knowledge
The Receiver argues that, even if Sarles did not know about
the fraud, other employees at the Bank did.
Yet, other than
Rasske, the Receiver does not identify any other employees and
merely relies on the same arguments rejected above.
also cites to the Bank’s failure to follow up on unusual aspects of
investigate Crown Forex’s move from Nicollet Avenue to La Salle
Avenue or the fact that, although characterized as a global fund,
all of the wire transfers were to domestic entities.
facts, at the very most, only support a weak inference that the
Bank may have been negligent in maintaining adequate policies,
See Camp v. Dema, 948 F.2d 455, 459 (8th Cir. 1991)
inference that the defendant must have had knowledge of the primary
violation is insufficient.”); K&S P’ship v. Cont’l Bank, N.A., 952
adequately supervising a risky lending policy was not sufficient
for aiding and abetting liability).
Further, it appears that the
Bank failed to adequately monitor clients generally, see Ex. 15,
ECF No. 244-19, rather than only those accounts used in the fraud.
See Am. Bank of St. Paul v. TD Bank, N.A., No. 09-2240, 2011 WL
1810643, at *8 (D. Minn. May 9, 2011) (inferring actual knowledge
where the bank violated its internal policies with respect to the
As a result, there is no genuine issue of material
fact as to the Bank’s actual knowledge.
Even if there were some evidence of actual knowledge, there is
no evidence that the Bank substantially assisted the fraud.
demonstrate substantial assistance, a plaintiff must “show that the
secondary party proximately caused the violation, or, in other
words, that the encouragement or assistance was a substantial
factor in causing the tort.”
K&S P’ship, 952 F.2d at 979.
affirmative step is required, because the mere presence of the
particular defendant at the commission of the wrong, or his failure
to object to it, is not enough to charge him with responsibility.”
Am. Bank of St. Paul, 713 F.3d at 462 (citation and internal
quotation marks omitted) (applying Minnesota law). In other words,
“[l]iability is based on [defendant’s] affirmative acts, not acts
it should have taken.”
Id. at 463.
“To determine what constitutes substantial assistance, courts
generally consider ... the nature of the act encouraged, the amount
of assistance given, the aider-and-abettor’s presence or absence at
the time of the tort, its relation to the primary actor, and its
state of mind.
Varga, 2013 WL 3338750, at *7.
knowledge (1) of its wrongful purpose and (2) that it is aiding the
Id. (citing Camp, 948 F.2d at 460).
The Receiver argues that the Bank substantially assisted the
Ponzi scheme through money transfers by non-signatories, detectionavoidance strategies, and improperly labeling the Crown Forex
account as a “checking/money market” account.
As discussed above,
there is no evidence that non-signatories withdrew funds from the
Crown Forex account.
And to the extent that Sarles failed to
follow proper procedures in opening the Crown Forex account, there
is no indication he did so in furtherance of the scheme.
as evidenced by the threat of account closure, Sarles’s failure to
obtain the necessary Secretary of State documentation actually made
exposure of the scheme more likely.
amount to substantial assistance.
Such circumstances do not
See Mendelsohn v. Capital
Underwriters, Inc., 490 F. Supp. 1069, 1084 (N.D. Cal. 1979)
(holding that there was no substantial assistance where accounting
services made exposure more likely).
The Receiver also contends
that a set of fourteen cashier’s checks issued by the bank with
incorrect remitter lines created the impression that the checks
were issued from segregated accounts, thereby creating an illusion
But the Receiver concedes that Tammy Sotebeer, who
drafted the checks, did not know about the scheme and nothing in
the record indicates that she acted with a wrongful purpose or at
the direction of those involved in the scheme.
See Ex. 13 at
Interrog. 1, ECF No. 244-17; Ex. 14 at Req. 46, ECF No. 244-18.
Therefore, there is no evidence that these checks were issued with
a wrongful purpose or that substantially furthered the scheme.
Finally, the Receiver relies on the Bank’s failures to conduct
adequate risk assessments, conduct customer due diligence, and
implement adequate suspicious activity monitoring.
failures only show what the Bank should have done.
above, the scheme must be furthered by affirmative acts, not mere
omissions. Even if omissions are sufficient, the Receiver fails to
show how they substantially assisted the fraud.
is no genuine issue of material fact concerning the Bank’s lack of
substantial assistance to the scheme, and, as a result, summary
judgment is warranted.13
Accordingly, based on the above, IT IS HEREBY ORDERED that:
Defendant’s motion for summary judgment [ECF No. 177] is
Defendant’s motion for sanctions or an adverse inference
[ECF No. 175] is denied as moot;
Defendant’s motion to exclude expert testimony [ECF No.
173] is denied as moot;
Plaintiff’s motions to exclude expert testimony [ECF Nos.
179, 181] are denied as moot; and
Because the court grants the motion for summary judgment,
it denies the motions for exclusion of expert testimony as moot.
The case is dismissed with prejudice.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: January 31, 2017
s/David S. Doty
David S. Doty, Judge
United States District Court
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