Fall 2014 • Issue 53, page 23

Appellate court victory for Receiver's Fee Payment in an SEC Ponzi-scheme Case

By Donnell, Jim*

Interesting report from Jim Donell (FedReceiver) and Byron Moldo (Ervin, Cohen & Jessup) of the LA/OC Chapter regarding an appellate court victory in an SEC Ponzi-scheme case pending in Federal Court in Los Angeles. After years of litigation, the District Court Judge had approved portions of a Stipulation providing for the Receiver to undertake certain tasks, including the sale of real property, filing final tax returns, and distributing funds to investors. However, the Judge struck the portions of the Stipulation providing for payment of fees and costs, the result of which would be that the Receiver, his counsel and accountants would have been working for free for 2½ years, and also would have to proceed to undertake the further tasks listed in the Stipulation. After a motion for reconsideration was unsuccessful, the Receiver appealed. In an unpublished decision, the 9th Circuit held that the District Court had abused its discretion in denying fees, and remanded with instructions to award fees. Counsel Byron Moldo submits that a pivotal point was that instead of merely submitting a Stipulation setting forth the amount of fees to be paid, he had attached to the Stipulation the hundreds of pages of billing statements, so that the District Court, and of course the 9th Circuit, saw that extensive work had been done. As icing on the cake, the 9th Circuit also awarded the Receiver his fees incurred in the appeal process. A real challenge turned into a great result. Well done.