Ashmore v. Pressley et al
Filing
83
ORDER and OPINION: The court finds that Defendants owe Plaintiff $73,705.00 stemming from the aforementioned Ponzi scheme. As to the declaratory judgment action, the court declares that Defendants are to transfer the Reformed Flag Pole Acres to Plaintiff. IT IS HEREBY ORDERED. Signed by Honorable J Michelle Childs on 10/18/17. (alew, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ANDERSON/GREENWOOD DIVISION
Beattie B. Ashmore, in his capacity as
court-appointed Receiver for Ronnie
Wilson and Atlantic Bullion & Coin, Inc.,
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)
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Plaintiff,
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v.
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Jennifer and Shawn Pressley,
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and Southern First Bank,
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Defendants.
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____________________________________)
Southern First Bank,
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)
Third-Party Plaintiff,
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v.
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Cassie Wilson f/k/a Cassie Kendall,
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Third-Party Defendant.
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____________________________________)
Civil Action No.: 8:15-cv-04116-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 this action
against Defendants Jennifer and Shawn Pressley (“Defendants”) to recover real property and
money that flowed from the Wilson-AB&C Ponzi scheme. 1
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“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
1
On February 15, 2017, Plaintiff filed a Motion for Summary Judgment. (ECF No. 53.)
Specifically, Plaintiff requested that the court grant summary judgment with regard to an unjust
enrichment claim against Defendants and to transfer to Plaintiff a strip of land (hereinafter “Flag
Pole Acres”) currently held by Defendants. (Id. at 1.) Defendants opposed Plaintiff’s Motion.
(ECF No. 56.) On September 19, 2017, the court granted in part Plaintiff’s Motion for Summary
Judgment as to the unjust enrichment claim, and denied in part Plaintiff’s Motion as to the
declaratory judgment action, and as to the person or entity responsible for payment of damages for
the unjust enrichment claim. (ECF No. 75.) The court held a bench trial on the disputed issues on
October 2, 2017. 2 After carefully considering all the evidence, the court makes the following
Findings of Fact and Conclusions of Law pursuant to Federal Rule of Civil Procedure 52.
I.
FACTUAL AND PROCEDURAL BACKGROUND
On December 2, 1999, Cassie Wilson, wife of Ronnie Wilson, purchased 59.74 acres of
land and placed the property in her name. (ECF No. 1 at 3.) On October 1, 2005, Cassie Wilson
purchased an additional 22.27 acres of land, totaling to 82.01 acres (hereinafter “the Wilson
Farm”). (Id. at 4.) Plaintiff alleges that the source of the money for the purchase of the 82.01
acres came from the Ponzi scheme. (ECF No. 53 at 3.)
representations that their investments were earning high rates of return –sometimes in excess of
200 percent.” (Id. at ECF No. 17 at 1.) On July 30, 2012, Wilson and AB&C pled guilty to two
counts of mail fraud stemming from their involvement in the criminal Ponzi scheme. (ECF No. 1
at 3.)
2
Plaintiff’s counsel was present at the bench trial. (Draft Tr. at 2.) Defendants were duly and
properly noticed of the bench trial, but did not appear. (Id.) When the notice was mailed to
Defendants, there was no information on record that Defendants’ address had changed. (Id.)
Notices prior to the bench trial were mailed to Defendants’ address on file and nothing was
returned as undeliverable. (Id. at 3.) Further, the address where the court has sent material to
Defendants has elicited a response from them previously, as shown by the filing of Defendant’s
Response to Plaintiff’s Motion for Summary Judgment. (Id. at 5.)
2
On February 26, 2008, Cassie Wilson deeded over to her and Ronnie Wilson’s daughter,
Jennifer Pressley, and her spouse, Shawn Pressley, 6.58 acres of the land carved out of the Wilson
Farm (hereinafter “the Pressley Parcel”). (Id.) Plaintiff, as court-appointed Receiver in the related
matter, In Re: Receiver for Ronne Gene Wilson and Atl. Bullion & Coin, Inc., C/A No.: 8:12-cv02078-JMC, ECF No.1 (D.S.C. July 25, 2012), alleges that Defendants “received from the AB&C
Ponzi scheme a two acre tract of land (hereinafter “Home Acres”) and approximately $135,000.00,
the majority of which was used to build a home (hereinafter “the Pressley Home”) on that land, as
well as an additional strip of land of approximately five acres (Flag Pole Acres) in order to give
access to the two acres of real property upon which their primary residence is located.” (ECF No.
53 at 3.) The money was mostly paid to a contractor named Robbie Whitfield (“Whitfield”). (Id.
at 4.) To accomplish the completion of the construction, Defendants obtained a loan from
Greenville First Bank n/k/a Southern First Bank (“the Bank”) in the amount of $120,000.00. (Id.
at 5.) In exchange, the Bank was given a mortgage on Defendants’ home built on Home Acres.
(Id.) At the time of the mortgage, Defendants and the Bank believed the home and corresponding
recorded mortgage were on the Pressley Parcel. (ECF No. 1 at 5.) On August 29, 2013, Plaintiff
commissioned a full survey of the Wilson Farm and discovered that the Pressley Home was not
built on the Pressley Parcel, but rather on the Wilson Farm, which is real property currently held
by Plaintiff. (Id.)
Based on his appointment as Receiver tasked with “locating, managing, recouping, and
distributing the assets of the Wilson-AB&C investment scheme,” Plaintiff commenced this action
against Defendants on October 6, 2015, asserting claims for declaratory judgment regarding the
legal ownership of the real property upon which Defendants’ home was built and unjust
enrichment in the amount of $135,000.00. (Id.)
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On February 15, 2017, Plaintiff filed a Motion for Summary Judgment, asserting that there
are no genuine disputes of material fact as to Plaintiff’s request for a declaratory judgment, or
claim for unjust enrichment and resulting damages of $135,000.00. (ECF No. 53 at 6.) As of the
filing of the Summary Judgment Motion, Plaintiff and the Bank agreed to a reformation of the
deed to reflect that the Pressley Home was built on the Pressley Parcel, now subject to the Bank’s
mortgage. 3 (Id. at 5.) Plaintiff asserted that the agreement to reform the deed involved only Home
Acres where the Pressley Home was built and the mortgage was placed. Thus, Plaintiff contended
that this left Flag Pole Acres, owned by Defendants, subject to Plaintiff’s declaratory judgment
action. (Id.)
On March 1, 2017, Defendants filed a response in opposition to Plaintiff’s Motion,
asserting there is a genuine dispute about the material facts because the amount of damages has
not been proven and thus, Plaintiff is not entitled to judgment as a matter of law. Further,
Defendants asserted that Flag Pole Acres is required by law to be attached to Home Acres 4 and
because the Pressley Home is in foreclosure, Plaintiff should seek damages from the Bank. (ECF
No. 56 at 2.)
On March 8, 2017, Plaintiff filed a Reply to Defendants’ response, asserting that based on
undisputed facts contained in the depositions of Shawn Pressley and Whitfield, Plaintiff lowered
the damages amount he was seeking from $135,000.00 to $73,705.00. (ECF No. 57 at 2.) Shawn
Pressley admitted that a portion of the initial costs for the construction of the home came from
3
See Southern First v. Pressley, 2016-CP-42-3079. Defendants are in default in the state court
action.
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Because the County of Spartanburg requires that all homes, such as the Pressley Home, have
legal access to the main county roads, Flag Pole Acres became an essential addition to the 2 acres
deeded to Defendants for the Pressley Home, all of which is now subject to foreclosure proceedings
in that county. However, Plaintiff contends that Flag Pole Acres are “critical to the Wilson Farm,”
subject to Plaintiff’s claim. (ECF No. 53 at 8 n.4.)
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Wilson through work performed by Whitfield and paid for by Wilson. (ECF No. 57-1 at 5-6.)
Whitfield stated that he was hired by Wilson to perform work on Defendants’ home. (ECF No.
57-2 at 2 ¶ 2.) He further stated, “I was responsible for contracting out the clearing and grading
of the lot, digging and pouring the basement, footings, foundation walls, framing, subfloors, roof
framing, roof sheathing and felting.” (Id. at ¶ 3.) In his affidavit, Whitfield stated that he had
receipts illustrating $4,300.00 he paid in checks, that he paid the concrete finisher $39,205.00 to
complete the basement slab and walls, and he had lumber and materials from Dixie lumber totaling
$13,200.00. (Id. at ¶ 4-5, id. at 3 ¶ 7.) Further, Whitfield asserted that he paid a framer five dollars
a square foot to frame the home and three dollars a square foot to frame the basement, resulting in
approximately $17,000.00 of costs. (ECF No. 57-2 at 3 ¶ 6.) Shawn Pressley specifically testified
that Whitfield “paid for the materials and the pouring of the basement” and “paid for the framers
to do the labor.” 5 (ECF No. 57-1 at 5.) Plaintiff, however, still sought control of Flag Pole Acres,
asserting it was not subject to the Bank’s foreclosure action, and contended that Defendants’
argument that Plaintiff should seek damages from the Bank was “wholly without merit.” (ECF
No. 57 at 3.)
On March 10, 2017, Defendants filed a Sur-Reply to Plaintiff’s Reply, asserting that the
documents Plaintiff relied on to lower the damages amount were questionable. (ECF No. 60 at 1.)
Further, Defendants re-asserted that because the Bank is selling their home, Plaintiff needed to
seek damages from the Bank, not them. (Id. at 2.) Lastly, Defendants asserted that Plaintiff’s
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Whitfield states in his affidavit that the home was 2,365 square feet and the basement was 2,050
square feet. (ECF No. 57-2 at 3 ¶ 6.) These numbers were used to calculate the cost of framing.
(Id.) In his deposition, Shawn Pressley described the home as 2,500 square feet plus an additional
2,000 square feet in the basement. (ECF 57-1 at 6.) As such, there is no dispute of fact as to the
size of the home.
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allegations that Flag Pole Acres was partially acquired and partially improved with monies arising
from the Ponzi scheme were not supported by sufficient evidence. (Id. at 3.)
On September 19, 2017, the court granted in part Plaintiff’s Motion for Summary Judgment
as to the unjust enrichment claim, and denied in part Plaintiff’s Motion as to the declaratory
judgment action, and as to the person or entity responsible for payment of damages for the unjust
enrichment claim. (ECF No. 75.) Consequently, on October 2, 2017, the court held a bench trial
to resolve the remaining issues.
II.
SPECIFIC FINDINGS AND CONCLUSIONS
On September 19, 2017, the court found that there still remained genuine disputes of
material fact as to: (1) whether Flag Pole Acres should be under control of the Bank’s foreclosure
action or part of the Wilson Farm that is under Plaintiff’s control; and (2) whether the $73,705.00
damages amount should come from Defendants or the Bank after it forecloses on Defendants’
home. (ECF No. 75.) On October 2, 2017, the court held a bench trial to resolve these issues.
Based on the documents produced by Plaintiff at the bench trial, the court finds that Defendants
must transfer the Reformed Flag Pole Acres to Plaintiff, and Defendants, not the Bank, owe
Plaintiff $73,705.00. The court addresses its reasoning below.
A. Control of Flag Pole Acres
As to the first inquiry regarding whether Flag Pole Acres should be under control of the
Bank’s foreclosure action or part of the Wilson Farm that is under Plaintiff’s control, the court
finds that Flag Pole Acres is part of the Wilson Farm, and thus, as court-appointed Receiver, is
under Plaintiff’s control. After filing the declaratory judgment action seeking clarification of the
location of the Pressley Home, Plaintiff and the Bank reached an agreement allowing for the
Bank’s dismissal and the Bank obtained, with Plaintiff’s consent, a reformed deed from state court
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reflecting that the Pressley Home was actually built on Home Acres (“Reformed Deed”). (ECF
No. 81.) The Reformed Deed shows that the Pressley Home is built on the 2.04 acres (Home
Acres) and the Flag Pole Acres is now 5.82 acres (“Reformed Flag Pole Acres”), for a total of 7.68
acres combined. (Id.)
On April 4, 2017, the South Carolina Court of Common Pleas issued an Order of
Foreclosure on Home Acres. (Id.) The Order of Foreclosure states, “The Mortgage was not
intended to encumber the entire 6.58 acre tract owned by the Pressleys; instead, it was intended to
encumber a tract containing approximately two acres where the Pressley’s home was being
constructed and the Easement.” (Id.) The Order of Foreclosure further states, “[T]he proceeds of
the sale [shall] be disbursed as follows: A. To the costs and expenses of the action; B. To plaintiff’s
attorney’s fees and court costs; C. To payment of plaintiff’s mortgage, plus any necessary advances
for taxes and insurance which may have been made by the plaintiff between the date of this hearing
and the day and time of the sale; D. The balance, if any, be held for further Order of this Court.”
(Id.)
As a result of the completion of the foreclosure proceedings and the resulting Order of
Foreclosure, Defendants remain in legal possession and control of the Reformed Flag Pole Acres.
This property is part of the Wilson Farm that the court determined was an asset defined as
“property directly traceable to the AB&C Receivership Entities.” (In re Receiver, 8:12-cv-2078JMC (D.S.C. 2015), ECF No. 217.) Thus, the court concludes that Defendants must transfer the
Reformed Flag Pole Acres to Plaintiff.
B. Payment of the Damages Amount
As to the second inquiry regarding whether the $73,705.00 damages amount should come
from Defendants or the Bank after it forecloses on Defendants’ home, the court finds that the
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damages amount is to come from Defendants. Defendants used monies that flowed directly from
the Ponzi scheme to start and partially complete construction of the Pressley Home. (ECF No. 75
at 7.) As a result, Defendants were unjustly enriched in the amount of $73,705.00. (Id. at 7-9.)
Beyond this amount, Defendants received a $120,000 loan from the Bank in exchange for
a mortgage on the Pressley Home. (ECF No. 1 at ¶ 28.) Subsequently, Defendants defaulted on
their mortgage with the Bank and on October 5, 2016, the Bank served Defendants with a
Summons and Complaint initiating foreclosure proceedings against Defendants on their mortgage.
(ECF No. 81). In the foreclosure proceeding, the Bank sought to recover only the funds allowed
for recovery by the Note and Mortgage. (Id.) The Bank’s loan does not negate the fact that
Defendants were initially unjustly enriched by $73,705.00 of Ponzi money. Therefore, the court
concludes that Defendants, not the Bank, owe Plaintiff $73,705.00.
III.
CONCLUSION
Based on the foregoing, and the court’s previous decision that Defendants were unjustly
enriched in the amount of $73,705.00 (ECF No. 75), the court finds that Defendants owe Plaintiff
$73,705.00 stemming from the aforementioned Ponzi scheme. As to the declaratory judgment
action, the court declares that Defendants are to transfer the Reformed Flag Pole Acres to Plaintiff.
IT IS SO ORDERED.
United States District Judge
October 18, 2017
Columbia, South Carolina
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