Ashmore v. Owens
ORDER and OPINION denying 11 Motion to Dismiss for Failure to State a Claim; denying 11 Motion to Dismiss for Lack of Jurisdiction. Signed by Honorable J Michelle Childs on 8/12/16.(alew, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
Beattie B. Ashmore, In His Capacity as
Court-Appointed Receiver for Ronnie Gene )
Wilson and Atlantic Bullion and Coin, Inc., )
Civil Action No. 8:15-cv-02373-JMC
ORDER AND OPINION
Plaintiff Beattie B. Ashmore (“Plaintiff”), in his capacity as court-appointed receiver for
Ronnie Gene Wilson (“Wilson”) and Atlantic Bullion and Coin, Inc. (“AB&C”), filed the instant
action against Defendant Brigitte Owens (“Defendant”) to recover grossly excessive payments
received by Defendant as a return on her investment in the Wilson-AB&C Ponzi scheme.1 (ECF
This matter is before the court as a result of Defendant’s Motion to Dismiss pursuant to
Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure. (ECF No. 11.) Plaintiff
opposes Defendant’s Motion to Dismiss in its entirety. (ECF No. 12.) For the reasons set forth
below, the court DENIES Defendant’s Motion to Dismiss.
“A Ponzi scheme is a fraudulent investment program in which funds are paid in by investors and
later investors[’] funds are used to pay out nonexistent phantom profits to the original investors,
thus creating the illusion that the fraudulent investment program is a successful, profit generating
enterprise which, in turn attracts new investment funds that are used to sustain the fraudulent
program.” United States v. Wilson, Cr. No. 8:12-cr-00320-JMC, ECF No. 1-1 at 2 ¶ 6 (D.S.C.
Apr. 4, 2012). In Wilson, the United States alleged that Wilson, through AB&C, “orchestrated a
Ponzi scheme whereby he led investors to believe that he was investing their money in silver,
when, in fact, Wilson was not buying silver but using the money for his personal gain . . . [and]
[t]o keep the Ponzi scheme going, Wilson also made payments to earlier investors to whom
Wilson made representations that their investments were earning high rates of return–sometimes
in excess of 200 percent. Id. at ECF No. 17 at 1.
RELEVANT BACKGROUND TO PENDING MOTION
Plaintiff is the court appointed Receiver in In Re: Receiver for Ronnie Gene Wilson and
Atlantic Bullion & Coin, Inc., C/A No. 8:12-cv-02078-JMC, ECF No. 1 (D.S.C. July 25, 2012),
a case related to the instant matter. Plaintiff alleges that “[o]n May 10, 2006, Defendant made an
initial ‘investment’ [in the Wilson-AB&C Ponzi scheme] of $40,000.00.” (ECF No. 1 at 4 ¶ 24.)
Subsequently, “Defendant received $295,190.00 in returns [from the Wilson-AB&C Ponzi
scheme] between March 24, 2008 and January 2012, resulting in a profit of $255,190.00.” (Id. at
Based on his appointment as Receiver tasked with “locating, managing, recouping, and
distributing the assets of the Wilson-AB&C investment scheme,” Plaintiff commenced the
instant action against Defendant on June 11, 2015, asserting claims for fraudulent transfer (in
violation of the Statute of Elizabeth, S.C. Code Ann. § 27-23-10 (2014) and/or the North
Carolina Uniform Fraudulent Transfer Act, N.C. Gen. Stat. §§ 39-23.1–39-23.12) and unjust
enrichment. (ECF No. 1 at 1 ¶ 1 & 6 ¶ 37–7 ¶ 51.) On September 13, 2015, Defendant filed the
instant Motion to Dismiss. (ECF No. 11.) Thereafter, on September 30, 2015, Plaintiff filed a
Memorandum in Opposition to Brigitte Owens’ Motion to Dismiss (ECF No. 12), to which
Defendant filed a Reply Brief in Support of Motion to Dismiss (ECF No. 13) on October 5,
The court has jurisdiction over this matter under 28 U.S.C. § 1331 pursuant to Plaintiff’s
allegation that the Complaint “is so related to the In Re Receiver, 8:12-CV-2078-JMC case and
the underlying criminal case, United States v. Wilson, et al, 8:12-cr-00320[,]” cases in which the
court has jurisdiction, “that it forms part of the underlying case or controversy.” (ECF No. 1 at 1
¶ 3.) The court may properly hear Plaintiff’s state law claims for fraudulent transfer and unjust
enrichment based on supplemental jurisdiction since these claims “are so related to claims in the
action within such original jurisdiction that they form part of the same case or controversy . . . .”
28 U.S.C. § 1367(a).
Motions to Dismiss for Lack of Personal Jurisdiction
When a defendant challenges the court’s personal jurisdiction under Rule 12(b)(2),
plaintiff has the burden of proving that jurisdiction exists “by a preponderance of the evidence.”
In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997). “[W]hen, as here, a district court rules
on a Rule 12(b)(2) motion without conducting an evidentiary hearing or without deferring ruling
pending receipt at trial of evidence relevant to the jurisdictional issue, but rather relies on the
complaint and affidavits alone, ‘the burden on the plaintiff is simply to make a prima facie
showing of sufficient jurisdictional basis in order to survive the jurisdictional challenge.’” Id.;
see also New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 (4th Cir.
2005) (noting that a plaintiff need only make a prima facie showing of jurisdiction when the
court does not conduct an evidentiary hearing). In deciding whether plaintiff has met this
burden, the court construes all disputed facts and draws all reasonable inferences from the proof
in favor of jurisdiction. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390,
396 (4th Cir. 2003); Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993). In ruling on
a motion to dismiss for lack of personal jurisdiction, the court may consider evidence outside of
the pleadings, such as affidavits and other evidentiary materials, without converting the motion
to dismiss into a motion for summary judgment. Magic Toyota, Inc. v. Se. Toyota Distribs., Inc.,
784 F. Supp. 306, 310 (D.S.C. 1992).
Motion to Dismiss for Failure to State a Claim
A Rule 12(b)(6) motion for failure to state a claim upon which relief can be granted
“challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th
Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952
(4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) . . . does not resolve contests
surrounding the facts, the merits of a claim, or the applicability of defenses.”). To be legally
sufficient a pleading must contain a “short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).
A Rule 12(b)(6) motion “should not be granted unless it appears certain that the plaintiff
can prove no set of facts which would support its claim and would entitle it to relief.” Mylan
Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When considering a Rule 12(b)(6)
motion, the court should accept as true all well-pleaded allegations and should view the
complaint in a light most favorable to the plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th
Cir. 1999); Mylan Labs., 7 F.3d at 1134. “To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).
Dismissal for Lack of Prior Permission to File This Action
1. The Parties’ Arguments
Defendant argues that the Complaint should be dismissed because Plaintiff was a court-
appointed receiver and he needed to have court approval prior to filing the action against her.
(ECF No. 11-1 at 3 (citing Booth v. Clark, 58 U.S. 322, 331 (1855) (“When appointed, very little
discretion is allowed to him, for he must apply to the court for liberty to bring or defend actions, .
. . .”)).) Specifically, Defendant asserts that a conflict of interest “exists between investors who
were net losers and those who are net winners” and Plaintiff cannot resolve the conflict without
direction from the court. (Id. at 3–4.) In this regard, Defendant asserts that the allegations of the
Complaint do not establish that Plaintiff received prior authorization from the court to file the
instant action. (Id. at 4.) As a result, Defendant contends that “this action should be dismissed
without prejudice until such time as . . . [Plaintiff] obtains leave of [c]ourt to file this Complaint
against . . . [Defendant]. (Id. (citing United States v. Providence Journal Co., 485 U.S. 693, 695
(1988) (dismissing the writ because the court-appointed prosecutor failed to get authorization
from the Solicitor General before seeking certiorari); Holland v. Sterling Enters., Inc., 777 F.2d
1288, 1294 (7th Cir. 1985) (addressing whether a receiver can appeal an order of the appointing
court without prior approval)).)
Plaintiff opposes dismissal of the Complaint on the aforementioned ground arguing that
he was expressly executing duties as directed by the court when he initiated the instant action
against Defendant. (ECF No. 12 at 2.)
2. The Court’s Review
Defendant contends that Plaintiff needed specific, prior permission from the court to file
the instant action against her. Defendant failed to present any case law or authority that directly
supports her position. She instead relies primarily on the Supreme Court’s observations in Booth
that a receiver “must apply to the court for liberty to bring or defend actions,” 58 U.S. at 331,
and “is an indifferent person between parties.” Id. at 332.
Upon review, the court observes that it considered Booth, Holland, and Providence
Journal and concludes that these cases do not create a prerequisite requiring Plaintiff to ask for
and receive prior direction from the court before filing the Complaint against Defendant.
According to Booth, a receiver only has those powers “conferred upon him by the order of his
appointment and the course and practice of the court . . . .” Id. at 331. In Plaintiff’s Order of
Appointment, the court expressly stated that Plaintiff was authorized to “institute such actions
and legal proceedings . . . as the Receiver deems necessary against those . . . wrongfully, illegally
or otherwise improperly . . . in the possession of . . . proceeds directly or indirectly traceable
from investors” in the Wilson-AB&C Ponzi scheme. In Re: Receiver for Ronnie Gene Wilson,
C/A No. 8:12-cv-02078-JMC, ECF No. 1 at 3 ¶ 2. Moreover, the court entered Plaintiff’s Order
of Appointment pursuant to 18 U.S.C. § 1956(b)(4)(A), which statute grants a receiver authority
under 28 U.S.C. § 754 “to sue in any district without ancillary appointment.” Id.; see also 18
U.S.C. § 1956(b)(4)(B).
In this matter, Plaintiff instituted an action against Defendant based on allegations that
she is improperly in possession of $225,190.00 in proceeds from the Wilson-AB&C Ponzi
scheme. The court concludes that Plaintiff’s actions in filing the instant matter were within the
powers conferred to him by his Order of Appointment. Therefore, Defendant is not entitled to
dismissal of the action even though Plaintiff failed to expressly request prior permission to file
the lawsuit against Defendant.
Dismissal for Lack of Personal Jurisdiction
1. The Parties’ Arguments
Defendant argues that the court should dismiss this action for lack of personal jurisdiction
over her. In support of this argument, Defendant asserts that the Complaint fails to (1) allege
that she purposefully availed herself of the privilege of conducting activities in South Carolina,
(2) describe actions taken by Defendant that were directed to South Carolina, and (3)
demonstrate why it would be fair for Defendant to be sued in South Carolina. (ECF No. 11-1 at
Plaintiff asserts that Defendant’s Rule 12(b)(2) Motion should be denied because she was
properly served under 28 U.S.C. § 1692 and the court has jurisdiction over her pursuant to 28
U.S.C. § 754. (ECF No. 12 at 2 (citing Quilling v. Cristell, No. Civ.A. 304CV252, 2006 WL
316981, at *2 (W.D.N.C. Feb. 9, 2006) (“Rule 4 of the Federal Rules of Civil Procedure
contemplates that a district court may acquire personal jurisdiction through the use of statutes of
the United States which provide for service of process upon a party not an inhabitant of or found
within the state in which the district court is located.”)).)
In her Reply Brief, Defendant argues that the application of §§ 754 and 1692 to
Plaintiff’s claims is erroneous because the property at issue is in South Carolina and these
statutes “only apply when the property at issue is ‘situated in different districts.’” (ECF No. 13
at 2 (citing 28 U.S.C. §§ 754 & 1692).) Defendant further argues that § 754 is unavailable to
Plaintiff because he failed to timely comply with the statute’s requirements. (ECF No. 13 at 3
(citing 28 U.S.C. § 754).) Finally, Defendant argues that §§ 754 and 1692 “do not on their face
authorize in personam jurisdiction, only in rem.” (ECF No. 13 at 3 (citation omitted).)
2. The Court’s Review
Plaintiff asserts that the court has jurisdiction over Defendant pursuant to 28 U.S.C. §§
754 and 1692.
“The in personam jurisdiction of a Court in a federal equity receivership
proceeding is not governed by traditional minimum contacts analysis . . . .” Quilling, 2006 WL
316981, at *1. “In cases involving federal equity receiverships, the receivership court acquires
nationwide jurisdiction based on the interplay of 28 U.S.C. § 754 and 28 U.S.C. § 1692.” Id.
(citations omitted). 28 U.S.C. § 754 provides as follows:
A receiver appointed in any civil action or proceeding involving property, real,
personal or mixed, situated in different districts shall, upon giving bond as
required by the court, be vested with complete jurisdiction and control of all such
property with the right to take possession thereof.
He shall have capacity to sue in any district without ancillary appointment, and
may be sued with respect thereto as provided in section 959 of this title.
Such receiver shall, within ten days after the entry of his order of appointment,
file copies of the complaint and such order of appointment in the district court for
each district in which property is located. The failure to file such copies in any
district shall divest the receiver of jurisdiction and control over all such property
in that district.
Id. 28 U.S.C. § 1692 further provides that “[i]n proceedings in a district court where a receiver is
appointed for property, real, personal, or mixed, situated in different districts, process may issue
and be executed in any such district as if the property lay wholly within one district, but orders
affecting the property shall be entered of record in each of such districts.” Id. “Through the
interaction of sections 754 and 1692 the receivership court acquires both in rem and in personam
jurisdictions in all districts where section 754 filings are timely made.” Quilling, 2006 WL
316981, at *2.
In Yancy v. Int’l Fid. Ins. Co., Case No. 1:16-cv-0057, 2016 WL 2997375 (E.D. Va. May
25, 2016), the court effectively described how §§ 754 and 1692 establish personal jurisdiction:
First, a “receiver appointed in any civil action or proceeding involving property,
real, personal or mixed, situated in different districts shall . . . be vested with
complete jurisdiction and control of all such property with the right to take
possession thereof” if the receiver files copies of the complaint and order of
appointment in the district where the property is located within ten days of his
appointment. 28 U.S.C. § 754. By making those timely filings, the receiver
acquires in rem jurisdiction over the receivership property. The receiver may then
establish personal jurisdiction over non-forum defendants in the receivership
court pursuant to Rule 4(k)(1)(C) because 28 U.S.C. § 1692 authorizes nationwide
service of process, provided the assertion of jurisdiction is compatible with due
process under the Fifth Amendment of the United States Constitution.
Yancy, 2016 WL 2997375, at *3 (citing ESAB Grp., Inc. v. Centricut, Inc., 126 F.3d 617, 626
(4th Cir. 1997); Terry v. Modern Inv. Co., No. 3-04cv00085, 2005 WL 1154274, at *4 (W.D.
Va. May 11, 2005)).
Upon consideration of the foregoing, the court finds that Plaintiff complied with the
statutory requirements of §§ 754 and 1692. The court appointed Plaintiff Receiver on July 25,
2012, and he filed copies of the Order Appointing Receiver and the Criminal Information
regarding the Wilson-AB&C Ponzi scheme in the United States District Court for the Western
District of North Carolina, where Defendant’s home of Etowah, NC (ECF No. 1-1) is located, on
August 6, 2012. USA v. Wilson, C/A No. 8:12-mc-00128-RJC, ECF No. 1 (W.D.N.C. Aug. 6,
2012). Plaintiff’s filing pursuant to § 754 was timely when the provisions of Rule 6(a)(1)(C) of
the Federal Rules of Civil Procedure are included in the assessment.2 See id. (providing that
where a statute does not specify a method of computing time, any deadline that falls on a
Saturday, Sunday or legal holiday will be timely if the filing is made on the next day that is not a
Saturday, Sunday or legal holiday). Plaintiff then affected service of process on Defendant.
(ECF No. 5.) Thus, the statutory requirements for personal jurisdiction in this court are satisfied.
Additionally, the court finds that asserting personal jurisdiction over Defendant would be
consistent with due process.
Due process is satisfied if jurisdiction is not so extremely
inconvenient or unfair that it outweighs the congressionally articulated policy of allowing
personal jurisdiction. Terry v. June, No. Civ.A. 303CV00052, 2003 WL 22125300, at * 4 (W.D.
Va. Sept. 12, 2003) (“In a case in which a federal court is attempting to exercise personal
jurisdiction over a defendant pursuant to a statute providing for nationwide service of process,
the congressionally articulated policy permitting the assertion of in personam jurisdiction should
The tenth day after July 25, 2012, was Saturday, August 4, 2012. 2012 calendar, http://www.
calendardate.com/2012.php (last visited Aug. 11, 2016).
prevail except in cases of ‘extreme inconvenience or unfairness.’ Such cases arise where ‘the
burden of distant litigation is so great as to put [the defendant] at a ‘severe disadvantage.’’”)
(quoting ESAB Grp., Inc. v. Centricut, Inc., 126 F.3d 617, 627 (4th Cir. 1997)). In this instance,
because Etowah, NC is only approximately 50 miles from Greenville, SC,3 the court is persuaded
that “extreme inconvenience or unfairness” would not outweigh “the congressional policy behind
the authorization of nationwide service of process provided by § 1692.” Terry, 2003 WL
22125300, at *5; see also Yancey, 2016 WL 2997375, at *5 (“Simply put, requiring Herbert to
travel less than eighty miles from his home to this courthouse is not constitutionally inconvenient
or unreasonable, regardless of the traffic conditions.”) (citation omitted). Therefore, the court
concludes that it has personal jurisdiction over Defendant.
Dismissal for Failure to State a Claim for Unjust Enrichment
1. The Parties’ Arguments
Defendant contends that Plaintiff’s claim for unjust enrichment fails because the
Complaint does not include the requisite allegations that it would “be somehow unfair for the
[D]efendant to retain the money or property at issue.” (ECF No. 11-1 at 6 (citations omitted).)
Defendant argues that in comparing her actions to those of other investors, “equity will not
intervene to take money from . . . [her] that other investors, evidently blinded by greed, lost with
their eyes open.” (Id. (citation omitted).) Additionally, Defendant argues that Plaintiff should
not be allowed to maintain claims for both unjust enrichment and fraudulent conveyance in
violation of the Statute of Elizabeth. (ECF No. 13 at 3–4.)
In response to Defendant’s contentions regarding the unjust enrichment claim, Plaintiff
simply observes that he has “alleged sufficient facts to support a claim against . . . [Defendant]
Distance between cities, http://www.distancebetweencities.net/etowah_nc_and_greenville_sc/
(last visited Aug. 11, 2016).
for unjust enrichment.” (ECF No. 12 at 3.)
2. The Court’s Review
In South Carolina, “[u]njust enrichment is an equitable doctrine, akin to restitution, which
permits the recovery of that amount the defendant has been unjustly enriched at the expense of
the plaintiff.” Ellis v. Smith Grading & Paving, Inc., 366 S.E.2d 12, 14 (S.C. Ct. App. 1988)
(citing Barrett v. Miller, 321 S.E.2d 198, 199 (S.C. Ct. App. 1984)). To establish unjust
enrichment in this matter, Plaintiff must prove the following three elements: (1) a benefit
conferred upon Defendants by Plaintiff; (2) realization of that benefit by Defendants; and (3)
retention by Defendants of the benefit under conditions that make it unjust for them to retain the
benefit. Ellis, 366 S.E.2d at 15. Additionally, a plaintiff may plead unjust enrichment as an
alternative claim pursuant to Fed. R. Civ. P. 8(d)(2). Enhance–It, L.L.C. v. Am. Access Tech.,
Inc., 413 F. Supp. 2d 626, 632 (D.S.C. 2006) (“Under South Carolina law, ‘when an identical set
of facts entitle the plaintiff to alternative remedies, he may plead and prove his entitlement to
either or both; however, the plaintiff may not recover both.’”) (quoting Minyard Enter., Inc. v.
Se. Chemical & Solvent Co., 184 F.3d 373, 381 (4th Cir. 1999)).
The court observes that Plaintiff as the Receiver in In Re: Receiver for Ronnie Gene
Wilson and Atlantic Bullion & Coin, Inc. has been empowered to institute legal proceedings
unincorporated organizations, that the Receiver may claim to have wrongfully, illegally or
otherwise improperly be in the possession of or misappropriated/transferred monies or other
proceeds directly or indirectly traceable from investors in the Ponzi scheme . . . .” C/A No. 8:12cv-02078-JMC, ECF No. 43 at 3 ¶ 2. Viewing the allegations of the Complaint in a light most
favorable to Plaintiff, the court finds that Plaintiff has alleged Defendant received a benefit of
$225,190.00 from the Wilson-AB&C Ponzi scheme and Defendant had an appreciation or
knowledge of that benefit.
(ECF No. 1 at 4 ¶ 24–5 ¶ 27.)
Plaintiff has further alleged
circumstances demonstrating why it would be inequitable for Defendant to retain the benefit that
she received from the Wilson-AB&C Ponzi scheme. (Id. at 2 ¶¶ 6–11 & 7 ¶¶ 46–50.) Therefore,
dismissal of Plaintiff’s cause of action for unjust enrichment against Defendant is not warranted.
E.g., Ashmore v. Taylor, C/A No. 3:13-2303-MBS, 2014 WL 6473714, at *4 (D.S.C. Nov. 18,
2014) (“The court finds that it would be inequitable for Defendant to ‘enjoy an advantage over
later investors sucked into the Ponzi scheme who were not so lucky.’”) (citation omitted); In re
Dreier LLP, 462 B.R. 474, 485 (Bankr. S.D.N.Y. 2011) (“The general rule in Ponzi scheme cases
is that net winners must disgorge their winnings. ‘[I]nvestors may retain distributions from an
entity engaged in a Ponzi scheme to the extent of their investments, while distributions
exceeding their investments constitute fraudulent conveyances which may be recovered by the
Trustee.’”) (citations omitted).
Moreover, the court is not persuaded that Plaintiff is foreclosed from asserting claims in
this action for both fraudulent conveyance and unjust enrichment. Generally, a party is not
required to make an election of remedies until after the verdict is entered and prior to the entry of
judgment. Enhance–It, 413 F. Supp. 2d at 632 (citing Minyard Enter., 184 F.3d at 381).
Upon careful consideration of the parties’ arguments and for the reasons set forth above,
the court hereby DENIES Defendant Brigitte Owens’ Motion to Dismiss pursuant to Rules
12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure (ECF No. 11).
IT IS SO ORDERED.
United States District Judge
August 12, 2016
Columbia, South Carolina
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