Trustee sued on behalf of victims in the Ponzi scheme worked by Bernard Madoff under the Securities Investor Protection Act (SIPA), 15 U.S.C. 78aaa, alleging that, when defendants were confronted with evidence of Madoff's illegitimate scheme, their banking fees gave incentive to look away, or at least caused a failure to perform due diligence that would have revealed the fraud. The court concluded that the doctrine of in pari delicto barred the Trustee from asserting claims directly against defendants on behalf of the estate for wrongdoing in which Madoff participated; SIPA provided no right to contribution; and the Trustee did not have standing to pursue common law claims on behalf of Madoff's customers. Accordingly, the court affirmed the district court's dismissal of the Trustee's claims. View "In Re: Bernard L. Madoff Investment Securities" on Justia Law
Plaintiffs appeal from the district court's order denying their motion for remand to state courts. This is an interlocutory appeal of a question certified by the district court, calling for interpretation of the jurisdictional provisions of the Edge Act, 12 U.S.C. 632. Whether the district court's denial of remand was proper turns on whether the dispute falls within section 632. The court concluded that the dispute did not fall within section 632's grant of jurisdiction so that removal from state to federal court was not authorized by the statute. Therefore, the court vacated the district court's order denying remand. View "AIG v. Bank of America" on Justia Law
Posted in: Banking, Real Estate & Property Law, Securities Law, Trusts & Estates, U.S. 2nd Circuit Court of Appeals
This appeal arose out of a proceeding brought to remedy securities fraud and recover assets that were the fruits of the fraud. The issues on appeal related to enforcement of, and compliance with, an order freezing various assets. The Trust and various individuals appealed from the magistrate judge's sanctioning of certain individuals. The court dismissed the appeals of Jill Dunn and David Wojeski for lack of jurisdiction, affirmed the sanction order as to Lynn Smith, and remanded to allow the Trust to contest the court's order regarding the disposition of trust property and for the magistrate judge to give additional guidance to the receiver as to disposition of the Trust property. View "SEC v. McGinn, et al." on Justia Law
Taxpayer appealed a decision of the Tax Court that disallowed her deduction for donating a "facade conservation easement" to the National Architectural Trust on the ground that there was no "qualified appraisal" within the meaning of Treasury Regulation 1.170A-13(c)(3). The court concluded that the Trust's agreement to accept the gift of the easement was not a transfer of anything of value to the taxpayer and thus did not constitute a quid pro quo for the gift of the cash. The court also concluded that the appraisal satisfied the regulatory specifications and vacated the Tax Court's judgment, remanding for further proceedings. View "Scheidelman v. Commissioner of Internal Revenue" on Justia Law
The Bank of New York Mellon, acting in its capacity as trustee of trusts established to hold residential mortgage-backed securities, settled claims that the originator and servicer breached obligations owed to the trusts. Then, as a condition precedent to the settlement, the Bank initiated an Article 77 proceeding in New York Supreme Court to confirm that it had the authority to enter into the settlement under the governing trust documents and that entry into the settlement did not violate its duties under the governing trust agreements. On appeal from an order of the district court denying petitioners' motion to remand the proceeding to New York Supreme Court, the court considered the application of 28 U.S.C. 1453(d)(3) and 1332(d)(9)(C), exceptions to the federal jurisdiction conferred by the Class Action Fairness Act of 2005 (CAFA), Pub.L. No. 109-2, 119 Stat. 4. The court held that the case fell within CAFA's securities exception as one that solely involved a claim that "related to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to" a security. Accordingly, the court dismissed the petition for lack of jurisdiction, reversed the order of the district court, and instructed it to vacate its decision and order and remanded the matter to state court. View "The Bank of New York Mellon v. Walnut Place LLC" on Justia Law
Petitioners appealed from a Memorandum and Order and Final Order of Forfeiture entered by the district court dismissing their petition for an ancillary hearing and rejecting their claim as beneficiaries of a putative constructive trust in defendant's forfeiture assets. At issue was whether the remission provision of 21 U.S.C. 853(i) precluded the imposition of a constructive trust in petitioners' favor and whether imposing a constructive trust would be consistent with a forfeiture statutory scheme provided by section 853. Because the court concluded that section 853(i) did not preclude, as a matter of law, recognizing a constructive trust and because a constructive trust was not inconsistent with the forfeiture statute, the court vacated the Final Order of Forfeiture and remanded the case to the district court to consider whether, pursuant to Vermont law, a constructive trust should be recognized in favor of petitioners.
Posted in: Banking, Constitutional Law, Criminal Law, Professional Malpractice & Ethics, Real Estate & Property Law, Trusts & Estates, U.S. 2nd Circuit Court of Appeals, White Collar Crime