1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 KRISTA FREITAG, Court-appointed Case No.: 21-CV-1620 TWR (AHG) permanent receiver for ANI Development, 12 LLC; American National Investments, ORDER GRANTING RECEIVER’S 13 Inc.; and their subsidiaries and affiliates, MOTION FOR SUMMARY JUDGMENT 14 Plaintiff,
15 v. (ECF No. 67) 16 KIM H. PETERSON, individually and as Trustee of the Peterson Family Trust dated 17 April 14, 1992, and as Trustee of the 18 Peterson Family Trust dated September 29, 1983; KIM FUNDING, 19 LLC, a California limited liability 20 company; ABC FUNDING STRATEGIES, LLC, a Delaware limited 21 liability company; ABC FUNDING 22 STRATEGIES MANAGEMENT, LLC, a Delaware limited liability company; ANI 23 LICENSE FUND, LLC, a California 24 limited liability company; KIM MEDIA, LLC, a California limited liability 25 company; KIM MANAGEMENT, INC., a 26 California corporation; KIM AVIATION, LLC, a California limited liability 27 company; AERO DRIVE, LLC, a 28 California limited liability company; 1 AERO DRIVE THREE, LLC, a California limited liability company; BALTIMORE 2 DRIVE, LLC, a California limited liability 3 company; GEORGE PALMER CORPORATION, a Nevada corporation; 4 KIM FUNDING LLC DEFINED 5 BENEFIT PENSION PLAN; and DOES 1 through 10, inclusive, 6 Defendants. 7
9 Presently before the Court—for the third time—is the Motion for Summary 10 Judgment or, in the Alternative, Partial Summary Judgment (“Mot.,” ECF No. 67) filed by 11 Plaintiff Krista Freitag, the Court-appointed permanent receiver for ANI Development, 12 LLC; American National Investments, Inc.; and their subsidiaries and affiliates (the 13 “Receivership Entities” or “Entities”), as well as the Opposition (ECF No. 73) filed by 14 Defendants Kim H. Peterson, individually and as trustee of the Peterson Family Trust dated 15 April 14, 1992 (the “1992 Trust”), and as trustee of the Peterson Family Trust dated 16 September 29, 1983 (the “1983 Trust”); Kim Funding, LLC (“Kim Funding”); ABC 17 Funding Strategies, LLC (“ABC Funding”); ABC Funding Strategies Management, LLC 18 (“ABC Management”); ANI License Fund, LLC (“ANI License”); Kim Media, LLC (“Kim 19 Media”); Kim Management, Inc. (“Kim Management”); Aero Drive, LLC (“Aero Drive”); 20 Aero Drive Three, LLC (“Aero Drive Three”); Baltimore Drive, LLC (“Baltimore Drive”); 21 George Palmer Corporation (“George Palmer Corp.”); and Kim Funding LLC Defined 22 Benefit Pension Plan (“KF Pension Plan”) and Plaintiff’s Reply (ECF No. 74). Through 23 the instant Motion as originally filed, the Receiver sought summary adjudication in her 24 favor as to her first cause of action against all Defendants jointly for avoidance and 25 recovery of fraudulent transfers in violation of California’s Uniform Voidable Transactions 26 Act (“CUVTA”), Cal. Civ. Code §§ 3439–3439.14, in the amount of $6,120,570.35, plus 27 prejudgment interest; seventh cause of action against ANI License for breach of contract 28 (promissory note) in the amount of $9,706,387.77; and eighth cause of action against 1 Defendant Peterson, as trustee of the 1992 Trust, for breach of contract (guaranty) in the 2 amount of $6,582,886.94. 3 The Court held a hearing on November 7, 2024, (see ECF No. 86; see also ECF No. 4 87 (“Tr.”)), following which the Court granted in part and denied in part the Motion, (see 5 generally ECF No. 88 (the “1st Prior Order”)), entering judgment in the amount of 6 $6,063,573.89 in favor of the Receiver and against Defendant ANI License on the 7 Receiver’s seventh cause of action for breach of contract (promissory note) and against 8 Defendant Peterson, as trustee of the 1992 Trust, on the Receiver’s eighth cause of action 9 for breach of contract (guaranty), jointly and severally. (See id. at 13–17.) The Court 10 denied without prejudice, however, the Motion as to the Receiver’s first cause of action for 11 avoidance and recovery of fraudulent transfers in violation of CUVTA pending 12 supplemental briefing regarding whether the Receiver should be permitted to amend her 13 Second Amended Complaint to conform to the proof presented at summary judgment.1 14 (See 1st Prior Order at 10–13, 17–18.) 15 Upon reviewing the Receiver’s (ECF No. 89) and Defendants’ (ECF No. 90) 16 supplemental briefs, the Court granted the Receiver’s request to conform the Second 17 Amended Complaint to the evidence submitted at summary judgment and—to mitigate any 18 concerns of prejudice—granted Defendants leave to file a further supplemental brief 19 addressing the Receiver’s arguments concerning their joint liability under Sections 20 3439.07(a)(3)(C) and 3439(b)(1)(A) of the California Civil Code. (See generally ECF No. 21 95 (the “2d Prior Order”).) Defendants declined to file a further supplemental brief, (see 22 generally Docket; see also ECF No. 96 at 3), and, consequently, the Receiver declined to 23 file a responsive brief. (See id.) 24 25 1 The Court also denied without prejudice the Receiver’s request for attorneys’ fees and costs against 26 ANI License, (see 1st Prior Order at 13–15), and Mr. Peterson, (see id. at 17), attributable to the enforcement of the Promissory Note and the Guaranty, respectively. Although the Court permitted the 27 Receiver the opportunity to file supplemental briefing to support the requested fees and costs, “the Receiver . . . determined not to further pursue the attorneys’ fees portion of her seventh or eighth claims 28 1 Accordingly—at long last—the Court concludes that the record is closed and that 2 the Court may rule on the merits of the sole surviving issue from the Receiver’s Motion, 3 namely, whether the Receiver is entitled to summary adjudication on her first cause of 4 action for avoidance and recovery of fraudulent transfers against Defendants. Upon careful 5 consideration of the Parties’ arguments, the record, and the applicable law, the Court 6 GRANTS the Receiver’s Motion, as follows. 7 UNDISPUTED FACTS2 8 The Parties are familiar with the facts underlying this action and have agreed to a 9 comprehensive set of 203 undisputed material facts, (see ECF No. 67-7 (“Jt. Stmt.”) 10 J-1–203), as well as 21 additional facts proposed by the Receiver to which Defendants did 11 not object, (see id. P-1, P-2, P-4–18, P-20–23), all which the Court incorporates by 12 reference herein in their entirety. 13 I. Evidentiary Objections 14 The Receiver also submits evidence of intercompany transfers of money between 15 Defendants during the Reporting Period, (see Jt. Stmt. P-24–P-71, P-73) to which 16 Defendants lodge some variation of the same two objections. (See ECF No. 73-3 (“Objs.”) 17 at 4–31.) Specifically, as to the Receiver’s facts P-24 through P-58, Defendants object 18 based on Federal Rules of Evidence 602 and 401: 19 FRE 602. The Receiver fails to substantiate these calculations and Defendants do not know from where these numbers were derived. 20
21 FRE 401: This fact is not relevant to proving the UVTA claim alleged in the SAC that any of the Defendants are liable for $6,120,570.35 as the immediate 22 or mediate transferees of any net gain from the ANI Loan Program. The 23 Receiver also fails to offer any evidence as to what portion of [specific transfers involving specific Defendants] are (a) transfers of net gains from the 24 ANI Loan Program, [(b) transfers not for reasonably equivalent value,] or 25 [(b)/(c)] transfers that occurred before September 15, 2017 (outside the statute of limitations). 26
27 2 If not specifically defined in this Order, capitalized terms shall have the same meanings as those 28 1 (See Objs. at 4–21.) As to the remaining facts, Defendants object only under Rule 401: 2 FRE 401: This fact is not relevant to proving the UVTA claim alleged in the SAC that [Defendant] is liable for $6,120,570.35 as the immediate or mediate 3 transferees of any net gain from the ANI Loan Program. [The Receiver also 4 fails to offer any evidence as to whether any of these transfers occurred before September 15, 2017 (outside the statute of limitations).] 5
6 (See Objs. at 21–31.) Regarding Defendants’ Rule 401 objections, “objections to evidence 7 on the ground that it is irrelevant . . . are . . . duplicative of the summary judgment standard 8 itself.” See Burch v. Regents of Univ. of Cal., 433 F. Supp. 2d 1110, 1119 (E.D. Cal. 2006). 9 “Instead of objecting, parties should simply argue that the facts are not material.” See id. 10 (emphasis in original). Because these objections “are simply superfluous in this context,” 11 see id. (citing Smith v. Cnty. of Humboldt, 240 F. Supp. 2d 1109, 1115–16 (N.D. Cal. 12 2003)), the Court OVERRULES Defendants’ objections under Rule 401. 13 As for Defendants’ objections to the Receiver’s alleged facts P-24 through P-58 14 under Rule 602, each cites to the Receiver’s declaration and the Schedules attached thereto 15 as evidentiary support. (See generally Jt. Stmt. P-24–P-58.) In her Declaration, the 16 Receiver attests that, 17 Where the matters stated in this declaration are statements of fact that are within my personal knowledge, they are true and correct. Where the matters 18 stated in this declaration are statements of fact that are not within my personal 19 knowledge, they are (a) derived from my review of (1) the books and records of the Receivership Entities that came into my custody following my 20 appointment, and (2) other records produced, including banking records, in 21 response to subpoenas or otherwise, by third-party sources; (b) founded on additional information or analysis supplied to me by key personnel of my team 22 and by third- party sources; or (c) based upon information and belief, and such 23 statements are true and correct to the best of my knowledge, information, and belief. 24
25 (See ECF No. 67-2 (“Freitag Decl.”) ¶ 2.) Having reviewed each of the Receiver’s 26 proffered facts P-24 through P-58, the Court determines that the Receiver’s work on the 27 forensic accounting provides sufficient personal knowledge to lay the foundation for their 28 admissibility. See Freitag v. Valeiras, No. 21-CV-1625-LAB-AHG, 2024 WL 1355146, 1 at *6 (S.D. Cal. Mar. 29, 2024) (overruling similar objections in related clawback case); 2 see also, e.g., Sec. & Exch. Comm’n v. Total Wealth Mgmt., Inc., No. 15-CV-226-BAS- 3 RNB, 2018 WL 3456007, at *3 (S.D. Cal. July 18, 2018) (overruling objections to a 4 receiver’s personal knowledge where “the Receiver’s testimony [wa]s (1) supported by 5 evidence, such as business records, a ledger reflecting business transactions, and thousands 6 of pages of documents in connection with the business and financial activities of the 7 Receivership, and (2) the Receiver’s own review of that evidence). The Court therefore 8 OVERRULES Defendants’ objections under Rule 602. 9 II. Material Facts 10 To provide context and aid the Court in its analysis of the Receiver’s remaining 11 CUVTA claim, the Court provides a brief recitation of certain undisputed facts material to 12 its analysis: 13 A. Peterson’s Early Involvement in the ANI Loan Program 14 “In early 2012, [Gina] Champion-Cain approached Peterson about the ANI Loan 15 Program,” (Jt. Smt. J-34), through which she solicited investments “to be used, as 16 represented to investors, to fund loans to applicants who were seeking to acquire an ABC 17 liquor license but did not have sufficient funds (i.e., equal to the license’s purchase price) 18 to, as required by law, deposit and maintain in an escrow account pending approval of their 19 application by the ABC.” (Id. J-12.) “Beginning in 2012, Peterson, initially through trusts 20 he controlled,3 placed substantial monies into the ANI Loan Program, transferring funds to 21 ANI Development4 in order to fund purported loans to liquor license applicants.” (Id. 22 J-36.) 23 / / / 24 25 3 “Since 2010, Peterson has been the trustee of the 1992 Trust[,],” (Jt. Stmt. J-37), the beneficiaries 26 of which are Peterson’s children. (Id. J-38.) Peterson has also been the trustee of the 1983 Trust, (id. J- 39), the beneficiaries of which are Peterson, his wife, and his children. (Id. J-40.) 27 4 “ANI Development’s business consisted primarily of running the ANI Loan Program,” and 28 1 “In light of the apparent success of the early loans, Peterson placed additional monies 2 into the ANI Loan Program.” (Id. J-41.) He also “actively recruited other persons and 3 entities to provide funding for the ANI Loan Program.” (Id. J-42.) 4 “In early 2014, Peterson, individually and as trustee of the 1983 Trust, entered into 5 a funding agreement with ANI Development.” (Id. J-45.) “Under the funding agreement 6 between Peterson and ANI Development, Peterson agreed to provide funding for the ANI 7 Loan Program (i.e., to provide money to ANI Development to fund loans to liquor license 8 applicants).” (Id. J-46.) “Under the funding agreement between Peterson and ANI 9 Development, Peterson, in exchange, would be paid 10% interest on the money provided, 10 plus half of all points paid by a liquor license applicant to ANI Development.” (Id. J-47.) 11 B. Peterson Creates the Funding Entities 12 “Peterson formed Kim Funding in 2014 for the purpose of providing further funding 13 for the ANI Loan Program.” (Jt. Stmt. J-48.) “Initially, the 1992 Trust held a 100% 14 membership interest in Kim Funding.” (Id. J-49.) “Since May 1, 2014, following an 15 assignment, Peterson has held a 90% membership interest in Kim Funding, while his wife 16 has held the remaining 10% membership interest therein.” (Id. J-50.) “At all relevant 17 times, Peterson has been the manager of and has otherwise controlled Kim Funding.” (Id. 18 J-51.) 19 “In early 2015, Kim Funding entered into a funding agreement with ANI 20 Development.” (Id. J-52.) “Under the funding agreement between Kim Funding and ANI 21 Development, Kim Funding agreed to provide further funding for the ANI Loan Program.” 22 (Id. J-53.) “As part of that funding process, Kim Funding brought in millions of dollars 23 from various ANI Loan Program Participants, including financial institutions, hedge funds, 24 individuals, and other entities, to purportedly be used as loans to applicants for the ANI 25 Loan Program.” (Id. J-54.) “Champion-Cain and Peterson agreed that ANI Development 26 and Kim Funding would split ANI Development’s share of interest earned on the loans 27 funded by monies raised through Kim Funding, with Kim Funding receiving 80% of the 28 interest and ANI Development receiving 20%.” (Id. J-55.) 1 “Peterson formed ABC Funding in late 2014 to serve as a vehicle to facilitate 2 additional funding for the ANI Loan Program.” (Id. J-56.) “Initially, Peterson held a 50% 3 membership interest in ABC Funding, while [Joseph] Cohen has held the remaining 50% 4 membership interest therein.” (Id. J-57; see also id. ¶ 35.) “Since December 5, 2014, 5 following an assignment from Peterson, Kim Funding has held a 50% membership interest 6 in ABC Funding.” (Id. J-58.) “ABC Management has been the manager of ABC Funding.” 7 (Id. J-59.) 8 “Since December 22, 2014, Kim Funding has held at least a 68% membership 9 interest in ABC Management, while Cohen, as trustee of his trust, has held the remaining 10 membership interest therein (which was later reduced from 32% to 30% to 25%).” (Id. 11 J-60.) “Peterson and Cohen have been the managers of ABC Management.” (Id. J-61.) 12 “At all relevant times, Peterson, through ABC Management, has controlled ABC Funding.” 13 (Id. J-62.) 14 “Through ABC Funding, Peterson similarly brought in millions of dollars for the 15 ANI Loan Program from dozens of additional individual ANI Loan Program Participants.” 16 (Id. J-63.) “Champion-Cain and Peterson agreed that ANI Development and ABC Funding 17 would split ANI Development’s share of interest earned on the loans funded by monies 18 raised through ABC Funding, with ABC Funding receiving 80% of the interest and ANI 19 Development receiving 20%.” (Id. J-64.) 20 “Peterson formed ANI License in late 2015 to serve as another vehicle to facilitate 21 additional funding for the ANI Loan Program.” (Id. J-65.) “Since September 1, 2015, Kim 22 Funding has held an 80% membership interest in ANI License, while GCC II LLC has held 23 the remaining 20% membership interest therein.” (Id. J-66.) “Peterson and Champion- 24 Cain have been the managers of ANI License.” (Id. J-67.) “At all relevant times, Peterson 25 has controlled ANI License.” (Id. J-68.) 26 “Through ANI License, Peterson brought in millions more dollars for the ANI Loan 27 Program from another ANI Loan Program Participant.” (Id. J-69.) “Similarly, Champion- 28 Cain and Peterson agreed that ANI Development and ANI License would split ANI 1 Development’s share of interest earned on the loans funded by monies raised through ANI 2 License, with ANI License receiving 80% of the interest and ANI Development receiving 3 20%.” (Id. J-70.) 4 C. Peterson’s Other Entities 5 “Initially, the 1992 Trust and the 1983 Trust each held a 50% membership interest 6 in Kim Media.” (Jt. Stmt. J-71.) “Since January 1, 2012, following an assignment from 7 the 1992 Trust, the 1983 Trust has held a 99% membership interest in Kim Media, while 8 the 1992 Trust has held the remaining 1% membership interest therein.” (Id. J-72.) 9 “Peterson has been the manager of Kim Media.” (Id. J-73.) 10 “Since March 8, 2017, Peterson has been the sole shareholder in,” (id. J-74), and 11 “the sole director and officer of Kim Management.” (Id. J-75.) 12 “Since November 3, 2017, Kim Funding has been the sole member in,” (id. J-76), 13 and “manager of Kim Aviation.” (Id. J-77.) 14 “Since August 17, 2012, the 1983 Trust has held a 98% membership interest in Aero 15 Drive, while Peterson’s wife has held the remaining 2% membership interest therein.” (Id. 16 J-78.) “Peterson has been the manager of Aero Drive.” (Id. J-79.) 17 “Since January 1, 2003, the 1983 Trust has held a 98% membership interest in Aero 18 Drive Three, while Peterson’s wife has held the remaining 2% membership interest 19 therein.” (Id. J-80.) “Peterson has been the manager of Aero Drive Three.” (Id. J-81.) 20 “Since January 3, 2003, the 1992 Trust has held a 99% membership interest in 21 Baltimore Drive, while Peterson has held the remaining 1% membership interest therein.” 22 (Id. J-82.) “Peterson has been the manager of Baltimore Drive.” (Id. J-83.) 23 “Since December 16, 2016, Peterson has been the sole shareholder in George Palmer 24 Corp.” (Id. J-84.) “Peterson has been the sole director and officer of George Palmer Corp.” 25 (Id. J-85.) 26 “Peterson has been the trustee of the KF Pension Plan.” (Id. J-86.) “The 27 beneficiaries of the KF Pension Plan are Peterson and his wife.” (Id. J-87.) 28 / / / 1 D. Transfers Involving Defendants Related to the ANI Loan Program 2 Of Defendants, Peterson, the 1992 Trust, the 1983 Trust, the Funding Entities and 3 ABC Management each transferred or received funds to or from the Receivership Entities 4 or Chicago Title,5 while the 1983 Trust, the Funding Entities, ABC Management, and Kim 5 Media transferred or received funds to or from ANI Loan Program Participants.6 (See 6 Mem. at 13–14; see also Jt. Stmt. J-88–141; ECF No. 67-6 at 8–94 (Schedules A–DD).) 7 Collectively, Defendants received $147,089,775.03 from the Receivership Entities 8 or Chicago Title and transferred $140,969,204.68 to the Receivership Entities or Chicago 9 Title, resulting in a net gain or profit of $6,120,570.35, and received $83,218,955.72 10 directly from ANI Loan Participants and transferred $76,327,670.02 directly to ANI Loan 11 Participants, resulting in a next gain or profit of $6,891,285.70. (See Mem. at 14; ECF No. 12 67-6 at 94 (Schedule DD); see also Jt. Stmt. J-88–141; ECF No. 67-6 at 8–92 (Schedules 13 A–CC).) Although Defendants’ total net gain or profit from the ANI Loan Program was 14 $13,011,856.05, (see id.), the Receiver seeks to recover only the $6,120,570.35 net gain 15 from Defendants’ transfers between them and the Receivership Entities or Chicago Title. 16 (See Mem. at 21 n.8.) The specific transfers at issue were all made to Kim Funding: 17 Date Amount Transferor Transferee Citation 18 8/16/2019 $236,767.29 Chicago Title Kim Funding ECF No. 67-6 at 36 19 8/7/2019 $1,036,000.00 Chicago Title Kim Funding ECF No. 67-6 at 36 20 8/2/2019 $716,119.94 Chicago Title Kim Funding ECF No. 67-6 at 36 21 7/26/2019 $1,281,250.00 Chicago Title Kim Funding ECF No. 67-6 at 36 22 7/16/2019 $119,075.35 Chicago Title Kim Funding ECF No. 67-6 at 36 23
24 25 5 Specifically, Peterson and the 1992 Trust transferred funds to the Receivership Entities or Chicago Title, while the 1983 Trust, the Funding Entities, and ABC Management both transferred funds to and 26 received funds from the Receivership Entities and Chicago Title.
27 6 Specifically, the 1983 Trust and Kim Media only received funds from ANI Loan Program Participants, while the Funding Entities and ABC Management both transferred funds to and received 28 1 7/15/2019 $2,233,875.00 Chicago Title Kim Funding ECF No. 67-6 at 36 2 7/11/2019 $3,784.93 ANI Development Kim Funding ECF No. 67-6 at 30 3 7/9/2019 $302,826.36 ANI Development Kim Funding ECF No. 67-6 at 30 4 6/27/2019 $190,871.487 Chicago Title Kim Funding ECF No. 67-6 at 36 5
6 LEGAL STANDARD 7 Under Federal Rule of Civil Procedure 56, a party may move for summary judgment 8 as to a claim or defense or part of a claim or defense. Fed. R. Civ. P. 56(a). Summary 9 judgment is appropriate where “the movant shows that there is no genuine dispute as to 10 any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 11 P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Although materiality is 12 determined by substantive law, “[o]nly disputes over facts that might affect the outcome of 13 the suit . . . will properly preclude the entry of summary judgment.” Anderson v. Liberty 14 Lobby, Inc., 477 U.S. 242, 248, (1986). A dispute is “genuine” only “if the evidence is 15 such that a reasonable jury could return a verdict for the nonmoving party.” Id. When 16 considering the evidence presented by the parties, “[t]he evidence of the non-movant is to 17 be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255. 18 The initial burden of establishing the absence of a genuine issue of material fact falls 19 on the moving party. Celotex, 477 U.S. at 323. The moving party may meet this burden 20 by “identifying those portions of ‘the pleadings, depositions, answers to interrogatories, 21 and admissions on file, together with the affidavits, if any,’ which it believes demonstrate 22 the absence of a genuine issue of material fact.” Id. “When the party moving for summary 23 judgment would bear the burden of proof at trial, ‘it must come forward with evidence 24 which would entitle it to a directed verdict if the evidence went uncontroverted at trial.’” 25 / / / 26
27 7 Although Chicago Title transferred $342,215.77 to Kim Funding on June 27, 2019, (see ECF No. 28 1 C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 480 (9th Cir. 2000) 2 (quoting Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992)). 3 Once the moving party satisfies this initial burden, the nonmoving party must 4 identify specific facts showing that there is a genuine dispute for trial. Celotex, 477 U.S. 5 at 324. This requires “more than simply show[ing] that there is some metaphysical doubt 6 as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 7 586 (1986). Rather, to survive summary judgment, the nonmoving party must “go beyond 8 the pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories, 9 and admissions on file,’ designate ‘specific facts’” that would allow a reasonable fact finder 10 to return a verdict for the non-moving party. Celotex, 477 U.S. at 324; see also Anderson, 11 477 U.S. at 248. Accordingly, the non-moving party cannot oppose a properly supported 12 summary judgment motion by “rest[ing] upon mere allegations or denials of his pleading.” 13 Anderson, 477 U.S. at 256. 14 ANALYSIS 15 As a result of the First and Second Prior Orders, the sole issue that confronts the 16 Court is whether the Receiver is entitled to summary adjudication as to her first cause of 17 action, through which she seeks to recover under CUVTA “$8,043,621.78 (representing 18 $6,120,570.35 in funds fraudulently transferred to Defendants and $1,923,051.43 in 19 prejudgment interest8)” of what Defendants jointly received in excess of amounts they 20 transferred to Chicago Title escrow accounts, their investors, and the Receivership Entities. 21 (See Mot. at 2–4; Reply at 12; SAC ¶¶ 144, 151–57; see also generally Mem.) Defendants 22 do not appear to contest that Kim Funding received a net gain of at least $6,120,570.35 23 from the Receivership Entities and Chicago Title. (See Opp’n at 9 (calculating a net gain 24 of $17,049,340.34).) In conjunction with the First Prior Order and the Ponzi scheme 25 presumption, Freitag v. Valeiras, No. 21-CV-1625-LAB-AHG, 2024 WL 1355146, at *8 26 27 28 1 (S.D. Cal. Mar. 29, 2024) (citing In re Slatkin, 525 F.3d 805, 814 (9th Cir. 2008)), there is 2 no question that the Receiver could recover this amount from Kim Funding under CUVTA. 3 But because Kim Funding is “now-defunct and assetless,”9 (see Reply at 3), such a victory 4 would be purely symbolic. The Receiver therefore seeks to recover from Defendants 5 collectively under California Civil Code §§ 3439.08(b)(1)(A), 3439(b)(1)(B), and 6 3439.07(a)(3).10 7
8 9 9 At oral argument, counsel for Defendants contended that they “d[id]n’t believe there [wa]s any evidence in the record on this motion that Kim Funding is either defunct or doesn’t have any assets.” (See 10 Tr. at 64:9–12.) But “Peterson formed Kim Funding . . . for the purpose of providing further funding for the ANI Loan Program,” (see Jt. Stmt. J-48), and that Court takes judicial notice of the fact that an 11 involuntary Chapter 7 petition was filed against Kim Funding, LLC shortly after the SEC Action was filed, see In re Kim Funding, LLC, No. 19-bk-5479-CL7 (S.D. Cal. Bankr. filed Sept. 11, 2019). In any 12 event, if the Receiver believed she could recover against Kim Funding after analyzing its bank accounts, 13 (see ECF No. 74-1 (“Supp. Freitag Decl.”) ¶ 6), there would have been no reason for her to seek summary adjudication against all Defendants. 14 10 In relevant part, Section 3439.08 provides: 15 (b) To the extent a transfer is avoidable in an action by a creditor under paragraph (1) 16 of subdivision (a) of Section 3439.07, the following rules apply: 17 (1) Except as otherwise provided in this section, the creditor may recover 18 judgment for the value of the asset transferred, as adjusted under subdivision (c), or the amount necessary to satisfy the creditor’s claim, 19 whichever is less. The judgment may be entered against the following:
20 (A) The first transferee of the asset or the person for whose benefit the 21 transfer was made.
22 (B) An immediate or mediate transferee of the first transferee, other than either of the following: 23 (i) A good faith transferee that took for value. 24
25 (ii) An immediate or mediate good faith transferee of a person described in clause (i). 26 Cal. Civ. Code § 3439.08(b)(1). Section 3439.07 provides, in relevant part: 27 (a) In an action for relief against a transfer or obligation under this chapter, a creditor, subject 28 1 Specifically, the Receiver contends that “all Defendants should be held jointly liable 2 on the Fraudulent-Transfer Claim in this case due to the manner in which (a) Peterson 3 controlled and extensively and freely moved funds between and among all Defendants and 4 (b) they haphazardly transacted with third parties, including the Receivership Entities, 5 Chicago Title, and ANI Loan Program Participants.” (See Mem. at 23.) “Under these 6 circumstances, a coherent tracing analysis identifying subsequent-transfer Defendants and 7 the specific amounts each received is impracticable,” (see id.), and “it would be grossly 8 inequitable and unfair to the Participants who suffered losses from the scheme to allow 9 Defendants to avoid collection entirely by leaving Kim Funding as a defunct, shell entity 10 and arguing that, because of Defendants’ own commingling and rapid churning of funds, 11 there is insufficient tracing to show Peterson's other entities and trusts (which actually hold 12 assets) benefited from the Ponzi-scheme net profits.” (See Reply at 6.) 13 Ultimately, the Court agrees with the Receiver. “[T]he statute states that judgment 14 may be had against transferees or ‘the person for whose benefit the transfer was made.’” 15 Qwest Commc’ns Corp. v. Weisz, 278 F. Supp. 2d 1188, 1191 (S.D. Cal. 2003) (emphasis 16 in original) (quoting Cal. Civ. Code § 3439.08(b)(1) (2001)11). As the Honorable Rudi M. 17 Brewster explained in Qwest Communications, “[i]n most cases, the only likely 18 beneficiaries of a fraudulent transfer are the debtor who avoids his creditors and the 19 20 21 . . . 22 (3) Subject to applicable principles of equity and in accordance with applicable rules 23 of civil procedure, the following:
24 . . .
25 (C) Any other relief the circumstances may require. 26 Cal. Civ. Code § 3439.07(a)(3)(C). 27 11 Although the verbiage in the current version of the statute has not changed, the current citation is 28 Section 3439.08(b)(1)(A). 1 transferee who receives the assets. That is not so in all cases, however, especially where, 2 as here, the debtor is a corporation.” See id. Indeed, “the party who forces a debtor to 3 make a transfer is almost always the entity for whose benefit such transfer was made, and 4 thus is generally always subject to [liability].” See id. at 1192 (alteration in original and 5 internal quotation marks omitted) (quoting In re Lucas Dallas, Inc., 185 B.R. 801, 809 (9th 6 Cir. B.A.P. 1995)). Further, “[CUV]TA also includes a broad remedial provision, 7 § 3439.07(a)(3)(C), which permits a court, ‘[s]ubject to applicable principles of equity,’ to 8 award ‘[a]ny other relief the circumstances may require.’” See Gutierrez v. Givens, 1 F. 9 Supp. 2d 1077, 1087 (S.D. Cal. 1998). 10 Here, it is undisputed that Mr. Peterson, through Kim Funding, was business partners 11 with Ms. Champion-Cain and acquired a 1% economic membership interest and 50% 12 voting membership interest in ANI Development. (See Jt. Stmt. J-41.) It is also undisputed 13 that Kim Funding has always been wholly owned by Mr. Peterson’s family and wholly 14 controlled by Mr. Peterson. (See id. J-37, J-38, J-48–J-51.) The remaining Defendants are 15 also owned in large part by Mr. Peterson or his family and are under his control. (See 16 J-37, J-38 (1992 Trust); J-39, J-40 (1983 Trust); J-48–J-51 (Kim Funding); J-56–J59, J-62 17 (ABC Funding); J-60, J-61 (ABC Management); J-65–J-68 (ANI License); J-71–J-73 (Kim 18 Media); J-74, J-75 (Kim Management); J-76, J-77 (Kim Aviation); J-78, J-79 (Aero Drive); 19 J-80, J-81 (Aero Drive Three); J-82, J-83 (Baltimore Drive); J-84, J-85 (George Palmer 20 Corp.); J-86, J-87 (KF Pension Plan).) Although this common ownership and control 21 would appear to suffice under several cases cited by the Receiver,12 the Court is also 22
23 12 See, e.g., SBC Berlin 2012-2014, Ltd. v. Babywatch, Inc., No. 18-CV-07611-EDL, 2019 WL 24 13203776, at *12 (N.D. Cal. Oct. 10, 2019) (“Given [individual defendants] Mur and Srsen’s ownership 25 of both the transferor and transferee companies, it is plausible that Mur and Srsen were ‘person[s] for whose benefit the transfer was made.’” (second alteration in original) (quoting Cal. Civ. Code 26 § 3439.08(b)(1)(A))); Oracle Am., Inc. v. Appleby, No. 16-CV-02090-JST, 2016 WL 5339799, at *9 (N.D. Cal. Sept. 22, 2016) (“Similarly [to Qwest Communications], here, it is a matter of common sense that the 27 co-owners of Terix, Appleby and Olding, stood to benefit from the assets of Terix being fraudulently transferred to TUSA, Ermine IP, and Ermine Services, which Appleby and Olding also co-owned. . . . 28 1 mindful that “[t]here are limits to the legal assessment of the type of ‘benefit’ that will 2 subject a beneficiary to liability for the debtor’s alleged fraudulent transfer.” See Lo v. Lee, 3 24 Cal. App. 5th 1065, 1073 (2018). 4 In 2018, having found no “California cases defining ‘the person for whose benefit 5 the transfer was made’ within the meaning of” Section 3439.08(b)(1)(A), the California 6 Court of Appeal in Lo looked to cases construing the Bankruptcy Code counterpart, 11 7 U.S.C. § 550(a), to conclude that “[t]ransfer beneficiary status depends on three aspects of 8 the benefit: (1) it must actually have been received by the beneficiary; (2) it must be 9 quantifiable; and (3) it must be accessible to the beneficiary.” See Lo, 24 Cal. App. 5th at 10 1073 (internal quotation marks omitted) (quoting In re Brooke Corp., 488 B.R. 459, 468 11 (Bankr. D. Kan. 2013)). “In addressing the first element, . . . ‘an actual benefit rather than 12 a merely intended one must be received in order for the beneficiary to be liable.’” Id. at 13 1074 (quoting Baldi v. Lynch (In re McCook Metals LLC), 319 B.R. 570, 591 (Bankr. N.D. 14 Ill. 2005)). “As to the second prong, . . . for a benefit to be ‘quantifiable,’ ‘[a] merely 15 theoretical benefit is not sufficient, since it would not be subject to disgorgement.’” Id. 16 (second alteration in original) (quoting McCook Metals, 319 B.R. at 591). Finally, the 17 beneficiary must have control or access to the funds. See id. at 1074–75 (citing McCook 18 Metals, 319 B.R. at 592). 19 Similarly and more recently, a federal district court in this Circuit concluded that, 20 While at least one court in this circuit[, i.e., Qwest Communications,] has found th[e] argument [that a majority shareholder for the transferee is a 21 transfer-beneficiary] persuasive, the position more consistent with corporate 22 law is that shareholders, officers, and directors are not liable for transfers to their corporation unless they “actually received distributions of the transferred 23
24 25 entity for whose benefit such transfer was made. . . . Here, Appleby and Olding are alleged to have forced Terix to make the transfer. Accordingly, it is reasonable to infer that they were the person[s] for whose 26 benefit the transfer was made.” (internal quotation marks omitted and fourth alteration in original) (first quoting Quest Commc’ns, 278 F. Supp. 2d at 1191; then quoting Cal. Civ. Code § 3439.08(a))); Qwest 27 Commc’ns, 278 F. Supp. 2d at 1191 (“It is a matter of common sense that the majority shareholder of a corporation ([individual defendant] Jonathan Weisz) would stand to benefit if the assets of his failing 28 1 property” (making them subsequent transferees under § 3439.08) or “a showing can be made to pierce the corporate veil.” 2
3 See Severs v. Garcia, No. 24-CV-01456-EMC (EMC), 2025 WL 2458862, at *3 n.2 (N.D. 4 Cal. Aug. 25, 2025) (comparing Qwest Commc’ns, 278 F. Supp. 2d at 1191, with Schechter 5 v. 5841 Bldg. Corp. (In re Hansen), 341 B.R. 638, 645–46 (Bankr. N.D. Ill. 2006))). Under 6 California law, “[t]he ‘mere fact of sole ownership and control does not eviscerate the 7 separate corporate identity that is the foundation of corporate law.’” Id. (quoting Katzir’s 8 Floor & Home Design, Inc. v. M-MLS.COM, 394 F.3d 1143, 1149 (9th Cir. 2004)). “To 9 impute alter ego liability, a plaintiff must show that (1) such a unity of interest and 10 ownership between the corporation and its equitable owner that no separation actually 11 exists, and (2) an inequitable result if the acts in question are treated as those of the 12 corporation alone.” Id. at *3 (citing Leek v. Cooper, 194 Cal. App. 4th 399, 417 (2011)). 13 Here, the Receiver has demonstrated, based on “[t]he movement of funds to, from, 14 and between Defendants[,] . . . that, when transfers were received by a Defendant, such 15 funds were not really owned by that Defendant, but instead were owned by Defendants 16 generally (i.e., by Peterson and his entities, as a whole) and used however Peterson saw fit 17 at that time.” (See Mem. at 23; see also id. at 23–26; Reply at 4–6.) Because the Court 18 has overruled Defendants’ evidentiary objections, see supra pages 4–6, the Receiver’s 19 substantial evidence of intercompany transfers among Defendants—including, for 20 example, numerous instances in which “the aggregate amount that one Defendant 21 transferred to another Defendant was sometimes substantially more than the aggregate 22 amount that the former received from the latter (and was sometimes zero),” (see Mem. at 23 24; see also Jt. Stmt. P-26, P-30, P-32–33, P-35, P-36, P-38, P-40, P-52–56); “funds from 24 one Defendant were transferred to another Defendant whenever the balance in the latter’s 25 account, immediately prior to that ‘intercompany’ transfer, was insufficient to make a 26 certain payment to a third party,” (see Mem. at 24; see also id. at 24–25; Jt. Stmt. 27 J-193–98, P-66–68); and “funds transferred from one Defendant to another Defendant were 28 significantly derived from funds related to the Program,” (see Mem. at 25; see also id. at 1 25–26; Jt. Stmt. J-188–90, J-199, P-62, P-64, P-69–72)—is undisputed. As such, “there 2 was no true separateness to how Peterson maintained his entities, their bank accounts, and 3 the funds flowing into and out of them.” (See Mem. at 26.) 4 If Mr. Peterson did not respect corporate formalities, the Court should not be so 5 constrained, particularly where doing so would result in an inequitable windfall to an 6 “insider”—even if unknowing—to the fraudulent scheme.13 See U.S. Sec. & Exch. 7 Comm’n v. Peterson, No. 23-55252, 2024 WL 5670686, at *1 (9th Cir. Apr. 28, 2025) 8 (second alteration in original) (“Case law and the record support the district court’s 9 deeming Appellants [Peterson, Kim Funding, and ABC Funding] to be Ponzi-scheme 10 ‘insiders,’ ‘[n]otwithstanding Peterson’s ignorance of the fraud.’”). Accordingly, whether 11 under the standard laid out by the California Court of Appeal or that for alter ego liability 12 presented by Severs, the Receiver has met her burden in establishing that there exist no 13 material disputes of fact that Defendants should be held jointly liable under Sections 14 3439.08(b)(1)(A), 3439(b)(1)(B), and/or 3439.07(a)(3) for the $6,120,570.35 net profit 15 amount and any prejudgment interest. The Court therefore GRANTS the Receiver’s 16 Motion for summary judgment as to her first cause of action under CUVTA against all 17 Defendants, jointly and severally. 18 Further, in its First Prior Order, the Court concluded that it would be equitable to 19 award prejudgment interest in this case. (See 1st Prior Order at 9–10.) As of the date the 20 Motion was filed on January 17, 2024, the Receiver sought prejudgment interest at 7% 21 totaling $1,923,051.43. (See Mem. at 27.) With interest accruing at $1,173.81 per diem, 22 23 24 13 Although Mr. Peterson, Kim Funding, and ABC Funding’s appeal of Judge Burns’ February 24, 25 2023 Order 1) Approving Receiver’s Recommended Treatment of Claims (Allowed, Disallowed, Disputed), [Dkt. 807-12, 807-15, 853-3]; 2) Approving Distribution Methodology, [Dkt. 807]; 26 3) Approving Proposed Distribution Plan, [Dkt. 807]; and 4) Granting Leave to File Excess Pages, [Dkt. 806] (19-CV-1628 ECF No. 958 (the “Distribution Order”)) was still pending when the Court held its 27 hearing on the instant Motion on November 7, 2024, (see ECF No. 87 (“Tr.”) at 4:14–12:17), the Ninth Circuit affirmed Judge Burns’ Distribution Order on April 28, 2025. See generally Peterson, 2024 WL 28 | of the date when the Court issued the First Prior Order, the total amount of preyudgment 2 || interest totals $2,343,275.41.'* 3 CONCLUSION 4 In light of the foregoing, the Court GRANTS the Receiver’s Motion for Summary 5 || Judgment (ECF No. 67) as to her first cause of action under CUVTA. Specifically, the 6 Court GRANTS summary judgment in favor the Receiver and against Defendants, jointly 7 ||and severally, in the amount of $8,463,845.76, representing $6,120,570.35 in net profits 8 $2,343,275.41 in prejudgment interest as of January 9, 2025. The Receiver SHALL 9 || FILE a status report concerning this action within fourteen (14) days of the electronic 10 || docketing of this Order. 11 IT IS SO ORDERED. 12 || Dated: October 20, 2025 —— 13 [ Oo) (a re 14 Honorable Todd W. Robinson 15 United States District Judge 16 17 18 19 20 21 22 23 24 |} SSS 25 M4 Because much of the delay between the issuance of the instant Order and the First Prior Order was 26 the fault of Defendants, the Court declines to award prejudgment interest accruing after the date on which the First Prior Order issued. By the Court’s calculation, 358 days elapsed between the filing of this 27 Motion on January 17, 2024, and the issuance of the First Prior Order on January 9, 2025. With interest 28 accruing at $1,173.81 per diem, this means that an additional $420,223.98 in interest had accrued as of January 9, 2025, bringing the total prejudgment interest to $2,343,275.41. 10