Miller v. Cook
Filing
30
MEMORANDUM DECISION AND ORDER granting 25 Motion for Summary Judgment: Receiver is to submit a proposed judgment. Signed by Judge David Nuffer on 8/13/14 (alt)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, NORTHERN DIVISION
GIL A. MILLER, as Receiver for IMPACT
PAYMENT SYSTEMS, LLC, and IMPACT
CASH, LLC,
v.
Plaintiff,
J.R. COOK, as individual,
MEMORANDUM DECISION and ORDER
GRANTING RECEIVER’S MOTION FOR
SUMMARY JUDGMENT
Case No. 1:12-CV-00063-DN
District Judge David Nuffer
Defendant.
Defendant J.R. Cook (Cook) invested in Kenai, an affiliate of Impact Payment Systems,
LLC and Impact Cash, LLC (together, Impact). Impact was ostensibly in the pay-day loan
business. On March 25, 2011, in SEC v. Clark, Impact was put into Receivership and the
plaintiff was appointed as Receiver. 1 Relying on the Utah Uniform Fraudulent Transfer Act
(UFTA), 2 the Receiver seeks to recover the amount Cook received from Impact in excess of his
investment. 3 The Receiver filed a motion for summary judgment. 4 Cook’s response 5 fails to raise
a genuine issue of material fact. This order grants the motion for summary judgment, declaring
that Cook must return to the estate the amount he received from Impact in excess of his initial
investment, plus pre- and post-judgment interest.
1
Case No. 1:11-cv-46-DN (Impact Payment Systems, LLC and Impact Cash, LLC are named defendants).
2
Utah Code Ann. § 25-6-1 to -14.
3
Complaint at 4–5, docket no. 2, filed March 2, 2012.
4
Amended Motion for Summary Judgment and Memorandum in Support (Motion), docket no. 25, filed March 13,
2014.
5
Motion in Opposition to Amended Motion for Summary Judgment (Opposition), docket no. 26, filed April 3, 2014.
UNDISPUTED FACTS 6
1.
This Court has already determined that Impact was operated as a Ponzi
scheme.
2.
Gil A. Miller was appointed as Receiver in this matter on March 25, 2011.
3.
The Receiver has concluded that Impact was operated with the characteristics
of a Ponzi scheme.
4.
The Receiver and the accountants working with him conducted a thorough
analysis of Impact’s business operations and its accounting records. They relied on the
contemporaneously kept records at Impact and on bank records obtained by subpoena.
5.
Impact commingled investor funds through intercompany and inter-account
transfers.
6.
Impact’s financial records were not audited by a reputable accounting firm.
7.
Although Impact purported to maintain balance records for each investor,
those records were inaccurate. According to an e-mail from one of the accounting employees
at Impact, many of the investor accounts should have had negative cash balances. At the time
of the e-mail, August 9, 2010, there was a total negative [investor account] balance of more
than $8.3 million.
8.
In order to make distributions to investors who had a negative balance,
Impact’s accountants would book entries in the accounting records labeled as “temp loans,”
effectively taking money that had been accounted for as belonging to one investor and
6
Unless otherwise footnoted, the following factual statements are from the Motion and are undisputed by Cook.
Bracketed material is added for clarity.
2
paying it to another. In reality, no transfer of funds was necessary as all of the money was in
a single account.
9.
Tori Jackson, who filled an accountant position at Impact, testified that
distributions were sent to investors when companies [associated with Impact] had negative
balances.
10.
Impact Payment Systems had losses totaling $1,056,055 as of December 31,
11.
Impact and its related companies did not show an operating profit in any year
2009.
when distributions to investors were made. The Impact entities realized a collective net loss
of nearly $3 million during that time. Nevertheless, they distributed over $52.6 million.
12.
Kenai is “a related company to Impact.” 7
13.
Funds invested in Kenai went from Kenai “directly into Impact.” 8
14.
Cook invested in Kenai. 9
15.
The Receiver allowed Cook’s investment in Kenai but refused to accept his
alleged total investment amount of $150,000. 10
16.
Douglas Croxall [a manager at Kenai] recalls in his deposition that Cook’s
investment was as much as $150,000 [in Kenai]. 11
7
Opposition at 2.
8
Id. at 13.
9
Id. at 11.
10
11
Id. at 12.
Id.
3
17.
Croxall and [TR Gourley, another manager of Kenai,] determined they would
no longer raise money with Kenai, and [Cook’s] investment was commingled with funds in
Impact. 12
18.
The money returned to Cook came directly from Impact. 13
19.
Emails to Tori Jackson in April of 2010 and Douglas Croxall in February of
2009 show that Cook requested payment to the account #2316008 at Capital Community
Bank. 14
20.
Cook received multiple transfers of funds from Impact. 15
21.
Dirk Pace, an Impact accounting employee, testified that since he was hired by
the company in September 2008, it recorded a loss each year and used investor money to
cover those losses.
22.
One of Impact's accountants, Brandon Cowley, testified in his deposition that
new investor money that was supposed to be used to fund payday loans came into Impact
accounts and left the accounts within the same week to pay out old investors who had
requested dividend payments or liquidation proceeds.
23.
Impact used investor funds that were supposed to be used for payday loans to
cover expenses.
24.
25.
12
13
14
15
One person, Scott Clark, was principally responsible for Impact’s operations.
Impact used investor funds to support Mr. Clark’s standard of living.
Id.
Id. at 13.
Id.
Id. at 16 (table identifying the date and amount of each transfer).
4
MATERIAL FACTS PURPORTEDLY IN DISPUTE
To avoid summary judgment, Cook asserts that the Receiver miscalculates and
misattributes Cook’s contributions and returns.
The Receiver argues “Mr. Cook Invested $200,000 in Impact.” 16 Cook disputes
1.
that amount, arguing he personally only invested $150,000 and a company he managed invested
$100,000. 17
2.
The Receiver argues Cook “received $263,000 from Impact. He therefore
received $63,000 more than he invested.” 18 Cook “disputes that the amounts transferred to him
were in excess of his investment,” 19 and states he “did not receive $63,000 more than he
invested.” 20
THE RECEIVER’S EVIDENCE SUPPORTS SUMMARY JUDGMENT AND
COOK’S EVIDENCE DOES NOT EFFECTIVELY OPPOSE IT
I.
The Receiver shows Cook invested $200,000 and received $263,000 in return
According to the Receiver, Cook made his first $100,000 investment on May 30, 2008,
and his second $100,000 investment on February 17, 2009. 21 The Receiver also alleges Cook
eventually “received $63,000 more than he invested.” 22 The Receiver relies on the records and
declaration of the forensic accountant David N. Bateman. Bateman states,
We have obtained bank records related to 308 separate bank accounts. We
have obtained accounting records maintained in 269 separate QuickBooks
files. We have extracted this electronic data and compiled it in a database,
16
Motion at 2.
17
Declaration of J.R. Cook at ¶ 6–9, attached as exhibit 1 to the Opposition, docket no. 26-2.
18
Motion at 2.
19
Opposition at 4.
20
Id. at 5.
21
Receiver’s Reply in Support of Motion for Summary Judgment (Receiver’s Reply) at 5, docket no. 27, filed April
17, 2014.
22
Motion at 2.
5
which now consists of approximately 993,600 contemporaneously recorded
transactions. . . . This data can be summarized and analyzed in its current
form. I believe the work that we have performed to date provides a sufficient
basis for my statements. 23
Impact’s records indicate that Cook invested a total of $200,000 with
Impact. 24
Impact’s records also show that Cook received payments totaling $263,000
between October 2008 and September 2010. 25
Bateman attaches to his declaration a Claim Analysis. The Claims Analysis shows each
transfer to Cook, starting October 15, 2008, and ending September 10, 2010. The first six
transfers are to a Capital Community Bank account ending in 6008 and twenty-three of the last
twenty-four transfers are to a Central Bank account ending in 2981. One transfer is made to a
Wells Fargo account.
According to Bateman, there is no record of anyone other than Cook investing any part of
the $200,000 investment; 26 there is no record of Cook’s total investment being composed of
anything other than two $100,000 investments; 27 and there is no record of anyone else receiving
the $263,000 disbursement Batemen attributes to Cook. 28
II.
Review of Cook’s evidence allegedly supporting his argument that he
invested $150,000
Cook argues he personally invested $150,000 and a company he managed invested
$100,000. 29
23
Declaration of David N. Bateman at ¶ 3, attached as exhibit A to the Receiver’s Reply, docket no. 27-1, filed
April 17, 2008.
24
Id. at ¶ 4.
25
Id. at ¶ 5.
26
See id. at ¶ 4.
27
Id. at ¶ 8–9.
28
Id. at ¶ 5.
29
See Opposition at 2.
6
Cook claims his personal investment of $150,000 occurred in three separate phases.
[I]n February of 2009 . . . I decided to personally invest in a new division of
Impact . . . called Kenai . . . . 30
. . . . I subsequently wired an [Impact] account . . . $100,000 on February 17,
2009. 31
I later gave TR [a manager at Kenai] an additional $10,000 in cash in March of
2009 and paid the remaining amount via a $40,000 check to TR on April 20,
2009. 32
Because the $100,000 investment he admits to making aligns in both date and amount
with the Receiver’s records, Cook’s dispute only focusses on two issues: 1) the Receiver
incorrectly credits him with a $100,000 investment on May 30, 2008 and 2) the Receiver fails to
credit him for two later investments totaling $50,000.
Cook provides a personal affidavit to support his first argument. In it he avers, “I was not
at a place where I could invest money, however, a company that I was managing at that time
decided to invest and wrote a check for [$]100,000 to Impact in May of 2008.” 33 He further
explains, “The Receiver has been unwilling to recognize the separation between [my] own
personal investment with Kenai and the prior investment of $100,000 made to Impact by the
company [I] was managing in 2008.” 34
In support of his second argument—that he made two separate investments totaling
$50,000—Cook refers to a Subscription Booklet, 35 deposition testimony of Douglas Croxall (a
manager at Kenai), 36 a cancelled check, 37 and his personal affidavit. 38
30
Declaration of J.R. Cook at ¶ 7.
31
Id. at ¶ 8.
32
Id. at ¶ 9.
33
Id. at ¶ 6.
34
Opposition at 3.
35
Subscription Booklet, attached as exhibit 4 to the Opposition, docket no. 26-5.
7
Cook says the Subscription Booklet was given to him to effectuate the deal with Kenai.
Under the section describing the purchase and sale of the note it reads,
The Company [Kenai] hereby agrees to issue and to sell to Subscriber [Cook], and
Subscriber hereby agrees to purchase from the Company, a Note in the aggregate
principal amount set forth on the signature page hereto. Upon acceptance of this
Subscription Agreement by the Company, the Company shall issue and deliver to
Subscriber a 24% Unsecured Promissory Note certificate evidencing the
obligation in the Form attached hereto . . . , against payment in U.S. Dollars of the
Purchase Price. 39
Cook does not provide the court with the certificate that the booklet says will be issued to
“evidenc[e] the obligation.” Additionally, the booklet is only signed by Cook. 40 The space
provided for Douglas Croxall to sign on behalf of Impact is blank. 41
Cook also relies on deposition testimony of Douglas Croxall. There Croxall, after asked
about Kenai’s funding, stated,
We had two investors or two people who invested money, one was called -- one
was a gentleman named J.R. Cook, and he was -- is or was friends with T.R., and
I don’t recall the exact amount, but it was either 100 or 125 or 150,000, some
round number like that, that money -- every penny of that money came in to
Kenai Financial and then went directly into Impact. 42
Next Cook refers to a cancelled check written after his February 17, 2009 investment of
$100,000. 43 The check is dated April 20, 2009; is for $40,000; and is written from My Green Tea
Extreme, LLC to Global Marketing. It appears to be signed by Cook and endorsed by TR
36
Croxall Dep. Aug. 29, 2011, attached as exhibit 2 to the Opposition, docket no. 26-3.
37
Check No. 3503 from My Green Tea Extreme, LLC to Global Marketing (April 20, 2009), attached as exhibit 7 to
the Opposition, docket no. 26-8.
38
Declaration of J.R. Cook.
39
Subscription Booklet at 5.
40
Id. at 14.
41
Id. at 15.
42
Croxall Dep. 15:24–16:5.
43
Opposition at 18; Check No. 3503 from My Green Tea Extreme, LLC to Global Marketing (April 20, 2009).
8
Gourley. In the portion of the check labeled “Memo,” someone, presumably Cook, wrote “March
Profits.”
Cook’s only support to verify an additional $10,000 cash investment is his personal
affidavit: “I later [after the February 17, 2009 wire transfer to Kenai for $100,000] gave TR an
additional $10,000 in cash.” 44
III.
Review of Cook’s evidence allegedly showing he did not receive funds in
excess of his investment
Cook “disputes that the amounts transferred to him were in excess of his investment.” 45
His supporting arguments are the following: 1) “The financial records of Impact were
incomplete, disorganized, and inaccurate” 46 and were thus unreliable sources to determine the
amounts of specific investments and returns; and 2) the bank statements from his personal
account show that the money he received from Impact was far less than the Receiver alleges. 47
For his first argument Cook relies on the deposition transcripts of four, former Impact
employees. For example, one states, “we tried to determine who had ownership of what in the
company. And there were a number of conflicting lists of owners and investors and what they
owned and what they didn’t own and that along with the fact that we couldn’t get any of the
accounting to match.” 48 And another reads,
Q [Receiver’s attorney]. Did you attempt to go back to bank statements to tie
investments to specific checks or wire transfers?
A. Yes.
Q. Were you able to do that?
A. In a lot of cases we were.
Q. You were?
44
Declaration of J.R. Cook at ¶ 9.
45
Opposition at 4.
46
Id. at 17.
47
Id. at 5.
48
Asplund Dep. 119:20–120:1, Dec.. 22, 2011, attached as exhibit 9 to the Opposition, docket no. 26-10.
9
A. Yes. 49
To support his second argument, Cook compares his bank statements 50 to the forensic
accountant’s Claim Analysis. Cook states, “As evidenced by the bank account statements, which
match the account number that [I] instructed Tori Jackson and Doug Croxall to send payments to
in an email, there is no record that an amount totaling $63,000 above [my] investment was
received.” 51 The bank account statements are all from Capital Community Bank. The first
statement is dated October 15, 2008, and the last is dated September 1, 2010. Within that range,
the statements show Cook receiving monthly transfers from Impact starting October 15, 2008
through March 16, 2009. Each transfer is for $2,000. While Cook never explicitly states what
should be inferred from these statements, he seems to suggest these six transfers totaling $12,000
represent the entire amount he received from Impact.
DISCUSSION
I. Standard for Summary Judgment
Summary judgment is appropriate 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.” 52 The moving
party “bears the initial burden of making a prima facie demonstration of the absence of a genuine
issue of material fact and entitlement to judgment as a matter of law.” 53
“Once the moving party has properly supported its motion for summary judgment, the
burden shifts to the nonmoving party to go beyond the pleadings and set forth specific facts
49
Matthews Dep. 31:11–18, Oct. 7, 2011, attached as exhibit 5 to the Opposition, docket no. 26-6.
50
Capital Community Bank Records, attached as exhibit 6 to the Opposition, docket no. 26-7.
51
Opposition at 5.
52
Fed. R. Civ. P. 56(a).
53
Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670–71 (10th Cir. 1998).
10
showing that there is a genuine issue for trial.” 54 “A ‘material fact’ is one ‘that might affect the
outcome of the suit under the governing law,’ and a ‘genuine’ issue is one for which ‘the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.’” 55
When assessing the evidence presented on a motion for summary judgment the court
must first determine if the evidence is admissible and then decide whether it creates a genuine
issue of material fact. When courts are “assessing a conflict [of fact], [they] will disregard a
contrary affidavit when they conclude that it constitutes an attempt to create a sham fact issue.” 56
Similarly, the Supreme Court adds that
the judge’s function [at the summary judgment stage] is . . . to determine whether
there is a genuine issue for trial. . . . [T]here is no issue for trial unless there is
sufficient evidence favoring the nonmoving party for a jury to return a verdict for
that party. If the evidence is merely colorable, or is not significantly probative,
summary judgment may be granted. 57
Therefore, the opposing party’s evidence will not create an issue of material fact if it is
inadmissible, an attempt to create a sham fact issue, not sufficient for a jury to return a verdict in
its favor, and merely colorable or not significantly probative.
II. The Receiver Properly Supports His Motion for Summary Judgment and Cook
Fails to Show There is a Genuine Issue of Material Fact
The Receiver argues he has met his summary judgment burden by showing there is no
genuine issue of material fact under the UFTA—the governing law in this case—and is therefore
entitled to judgment as a matter of law. According to the UFTA, “a transfer made . . . by a debtor
is fraudulent as to a creditor . . . if the debtor made the transfer . . . with actual intent to hinder,
delay, or defraud any creditor of the debtor; or without receiving a reasonably equivalent value in
54
Sally Beauty Co., Inc. v. Beautyco, Inc., 304 F.3d 964, 971 (10th Cir. 2002) (citations omitted).
55
Pelt v. Utah, 539 F.3d 1271, 1280 (10th Cir. 2008) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)).
56
Franks v. Nimmo, 796 F.2d 1230, 1237 (10th Cir. 1986).
57
Anderson v. Liberty Lobby Inc., 477 U.S. 242, 249–50 (1986) (citations omitted).
11
exchange for the transfer.” 58 The Receiver’s burden of proving actual intent to hinder, delay or
defraud is conclusively established by proving the entities within the receivership operated as a
Ponzi scheme. 59 “[T]he general rule is [that] to the extent innocent investors have received
payments in excess of the amounts of principal that they originally invested, those payments are
avoidable as fraudulent transfers.” 60
Accordingly, to establish he is entitled to judgment as a matter of law, the Receiver must
show there is no genuine issue that 1) Impact transferred funds to Cook in excess of his initial
investment, and 2) that Impact transferred funds to Cook with the intent to hinder, delay, or
defraud its creditors. The second element can be met by showing Impact operated as a Ponzi
scheme.
i.
Impact transferred funds to Cook in excess of his initial investment
Through the expert report and disclosure of David N. Bateman, the Receiver establishes
that Impact transferred funds to Cook in excess of his initial investment. Bateman is a forensic
accountant that amassed a significant amount of data from Impact. After sifting through and
organizing the data, Bateman avers that “the work . . . performed . . . provides a sufficient
basis” 61 to identify individual investors, the amounts they invested, and the amounts they
received in return. His analysis of the evidence clearly shows Cook invested $200,000 in Impact
(two separate, $100,000 investments) and received $263,000 in return (thirty transfers to three
different bank accounts). 62
58
Utah Code Ann. § 25-6-5(1)(a)–(b).
59
See Warfield v. Byron, 436 F.3d 551, 558 (5th Cir. 2006).
60
Donell v. Kowell, 533 F.3d 762, 770 (9th Cir. 2008).
61
Expert Report and Disclosure of David N. Bateman at 12.
62
Claim Analysis - JR Cook – NC, attached to the Declaration of David N. Bateman.
12
Cook’s attempt to dispute Bateman’s findings that he invested $100,000 on May 30,
2008, fails because it is an attempt “to create a sham fact issue” with an affidavit. Cook submits
his personal affidavit as evidence to show he did not make a $100,000 investment on May 30,
2008. However, the dates on the bank statements he submitted belie this assertion. A summary of
Cook’s chronology makes this clear:
May 30, 2008—Cook alleges that a business he was managing invested $100,000 in
Impact. 63
Oct. 2008–March 2009—Impact transfers $12,000 into Cook’s personal bank account. 64
Feb. 17, 2009—Cook makes what he alleges is his first investment of $100,000 in
Impact. 65
Cook’s summary shows he received a return on his investment before actually investing;
something unlikely for even the most promising investment. Cook makes no attempt to explain
this inconsistency. Also, the accounts listed on the bank statements are his, 66 and as he states in
his Opposition67 and attached exhibits,68 those were the accounts to which he directed Impact
employees to transfer his funds.
For the alleged $50,000 investment made after February 17, 2009, Douglas Croxall’s
deposition, the Subscription Booklet, and the cancelled check are “merely colorable, or . . . not
significantly probative.” 69 They are insufficient to support Cook’s claim of a $50,000 investment
63
Opposition at 11.
64
Capital Community Bank Records.
65
Opposition at 11.
66
See Affidavit of Custodian of Business Records in Capital Community Bank Records, attached as exhibit 6 to the
Opposition, docket no. 26-7.
67
Opposition at 15.
68
E-mail from J.R. Cook to Tori Jackson, an accounting employee at Impact (Apr. 20, 2010, 10:49 AM); E-mail
from J.R. Cook to Douglas Croxall, a manager at Kenai, subsidiary of Impact (Feb. 17, 2009, 12:54:35). Both emails attached as exhibit 3 to the Opposition, docket no. 26-4.
69
Anderson, 477 U.S. at 249–50 (citations omitted).
13
made after February 17, 2009. In his deposition testimony, Croxall does not recall the exact
amount Cook invested; the monetary range he suggests does not help either party. The
Subscription Booklet is unsigned and isn’t accompanied by the requisite form certifying the
obligation, so it appears preliminary to an investment, not evidence of it. The cancelled check is
made to an organization not under the Receivership; it appears on its face to be related to
something wholly separate from Impact; and Cook’s attempts to make Gourley—the endorser—
a representative of Impact are underdeveloped and unsupported. More importantly, Cook never
provides admissible evidence that this check ever went to Impact. Finally, for the $10,000 cash
investment, Cook’s only evidence is his affidavit unsupported by any documentation. Aside from
the fact that his affidavit has been undermined by clear contradictions in the record, it is selfserving, and “self-serving affidavits are not sufficient” to preclude summary judgment. 70
In Terry v. June 71 the court granted summary judgment even though the defendant
contested the amount of money connected to the Ponzi scheme. The court found that the
defendant did “not produce any documentation evidencing such funding or indicating where [it]
came from. . . . Such a defense is clearly insufficient for surviving summary judgment, a point in
the proceedings where the Defendant must present probative and material evidence.” 72
Ultimately, all of Cook’s efforts to contest the Receiver’s conclusions would be insufficient for a
rational jury to return a verdict in his favor.
Cook’s effort to cast doubt on the forensic accountant’s records is also insufficient to
create a genuine issue of material fact. “The Receiver acknowledges that there were inadequacies
70
Hall v. Bellmon, 935 F.2d 1106, 1111 (10th Cir. 1991). See also Hogue v. City of Fort Wayne, 599 F.Supp.2d
1009, 1016 (N.D. Ind. 2009) (“the following statements are not properly included in an affidavit [opposing a motion
for summary judgment] and should be disregarded: . . . (3) self-serving statements without factual support in the
record”) (citations omitted).
71
No. 3:03CV00052, 2005 WL 3466550 (W.D. Va. Dec. 16, 2005).
72
Id. at *5.
14
in Impact’s accounting records. To resolve this problem, he obtained records from Impact’s
banks.” 73 Bateman never claims to rely on Impact’s records alone. In his export report he states
that he
relied on the contemporaneous hard copy and electronic financial and operational
records maintained by Impact, documentation obtained by subpoena from the
various banks that provided services to Impact during its operation and
documentation provided by various investors in Impact (claim forms filed with
the Receiver or subsequent disclosure). In addition to these documents, we have
relied on testimony from various witnesses who were either deposed or
interviewed by the Receiver and his counsel. 74
Even though Impact’s records were unclear at points, the Receiver could make determinations by
reaching beyond those records and using tools only available in legal proceedings, such as
subpoenas, depositions, and interrogatories.
Finally, Cook’s reference to his account statements and the attendant implication that
they represent the whole of what he received from Impact is insufficient to create a genuine
issue. At no point does the Receiver allege that the total amount was transferred to only one
account. He traced transfers from Impact into three separate accounts attributed to Cook. Cook
fails to account for or dispute the existence of or deposits into these other accounts.
ii.
Impact operated as a Ponzi scheme
The Tenth Circuit defines a Ponzi scheme as “an investment scheme in which returns to
investors are not financed through the success of the underlying business venture, but are taken
from principal sums of newly attracted investments.” 75 The overwhelming and unrefuted
evidence supports the Receiver’s assertion that Impact was a Ponzi scheme. Impact commingled
funds; used new investor money intended to fund payday loans to instead pay out old investors
73
Receiver’s Reply at 8.
74
Expert Report and Disclosure of David N. Bateman at 5.
75
In re M&L Business Machine Co., Inc., 84 F.3d 1330, 1332 n.1 (10th Cir. 1996) (citations omitted).
15
who requested dividend payments; and it was never audited by a reputable financial firm.
Brandon Cowley, an accountant employed by Impact, testified in his deposition that Impact used
new investor money to pay old investors. Cook fails to dispute any of this evidence that shows
Impact was a Ponzi scheme. He also failed to make any claim that he performed services of
“reasonably equivalent value in exchange for the transfer[s].” 76
iii.
Conclusion
The undisputed facts show Cook invested $200,000 in Impact and received $263,000 in
return. Impact was a Ponzi scheme. “To the extent innocent investors have received payments in
excess of the amounts of principal that they originally invested, those payments are avoidable as
fraudulent transfers.” 77
ORDER
IT IS HEREBY ORDERED that the Receiver’s Amended Motion for Summary
Judgment 78 is GRANTED.
IT IS FURTHER ORDERED that the Receiver shall submit a proposed judgment against
J.R. Cook in the amount of $63,000, together with prejudgment interest at the appropriate rate
through the date of this order, and post judgment interest accruing at the statutory rate.
Signed August 13, 2014.
BY THE COURT
________________________________________
District Judge David Nuffer
76
Utah Code Ann. § 25-6-5(1)(b).
77
Donell, 533 F.3d at 770.
78
Docket no. 25, filed March 13, 2014.
16
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