Sallah v. Worldwide Clearing LLC

855 F. Supp. 2d 1364, 2012 U.S. Dist. LEXIS 50396, 2012 WL 1193892
CourtDistrict Court, S.D. Florida
DecidedApril 10, 2012
DocketCase No. 10-62264-CIV
StatusPublished
Cited by15 cases

This text of 855 F. Supp. 2d 1364 (Sallah v. Worldwide Clearing LLC) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sallah v. Worldwide Clearing LLC, 855 F. Supp. 2d 1364, 2012 U.S. Dist. LEXIS 50396, 2012 WL 1193892 (S.D. Fla. 2012).

Opinion

ORDER

ROBIN S. ROSENBAUM, United States Magistrate Judge.

This matter comes before the Court upon the Receiver’s Motion to Compel Better Discovery Responses from Defendant Geegee Morgan [D.E. 450]. The Court has reviewed the Receiver’s Motion, all filings in support thereof and in opposition thereto, and the record in this matter, and is otherwise duly advised in the premises. After careful consideration, the Court now grants in part and denies in part the Receiver’s Motion, as set forth below.

I. Background

This case arises out of Katz v. MRT, LLC, Case No. 07-61438-CIV-COHN (S.D.Fla.) “(Katz Litigation”), a class action that alleged that MRT Holdings, LLC, MRT LLC, and others (collectively, the “Katz Defendants”) had engaged in a Ponzi scheme that raised in excess of $50 million. See Katz, Case No. 07-61438 at D.E. 1. The Katz Plaintiffs had all invested in the alleged scheme and lost money. See id. According to the Katz complaint, the Katz Defendants solicited the Katz Plaintiffs and others to make loans to the Katz Defendants, purportedly for the Katz Defendants to use to trade foreign-currency futures offshore with Swiss banks. See id. The Katz Plaintiffs further asserted that the Katz Defendants promised returns on investments ranging between 12% annually and 11 % monthly. See id. In reality, however, the Katz Plaintiffs averred, the Katz Defendants made fraudulent representations about what they were doing with the investments and, in.classic Ponzischeme form, used monies from the later investors to pay off the earlier investors. See id.

During the course of the Katz Litigation, the Katz Plaintiffs obtained default [1367]*1367judgments against certain of the Katz Defendants (the “Defaulted Katz Defendants”). See D.E. 6; see also Katz, Case No. 07-61438, D.E. 18; D.E. 36. The Defaulted Katz Defendants entered into a class-action settlement agreement with the Katz Plaintiffs, and Judge Cohn entered an order approving that settlement agreement on November 23, 2009, after notice to the class and a fairness hearing. See D.E. 6 at ¶¶ 14-15; see also Katz, Case No. 07-61438, D.E. 83. That same day, Judge Cohn entered final judgment for the Katz Plaintiff Class for $50 million. D.E. 6 at ¶ 16; see also Katz, Case No. 07-61438, D.E. 87.

At the Katz Plaintiffs’ request, Judge Cohn then appointed James D. Sallah (“Receiver”), Plaintiff in the pending case, as the Receiver for the Defaulted Katz Defendants, referred to in the appointing order as the “Receivership Entities.” See D.E. 6 at ¶ 17; see also Katz, Case No. 07-61438, D.E. 90. According to the order appointing the Receiver, the Receiver was to investigate the affairs of the Receivership Entities and implement legal proceedings for the benefit of the Receivership Entities, their investors, and their creditors for any monies that may have been illegally or otherwise wrongfully misappropriated or transferred from the Receivership Entities. See D.E. 6 at ¶ 2; see also Katz, Case No. 07-61438, D.E. 90.

Based on the appointing order in Katz, Plaintiff James D. Sallah, as Receiver, brought the instant matter seeking to recover payments that the Receivership Entities made to certain purported investors in the Receivership Entities, according to the Receiver, “without any apparent investment or, alternatively, in excess of their respective investments” (“False Profit Payments”). See D.E. 6 at ¶¶ 18-20. The Amended Complaint in the instant cases asserts that Defendant Geegee Morgan received False Profit Payments. See generally D.E. 6. Accordingly, the Receiver seeks to recover any such payments that Morgan allegedly obtained. See id.

In furtherance of that goal, the Receiver served on Defendant Morgan his First and Second Requests for Production. See D.E. 450 at ¶¶ 1-2; D.E. 450-1; D.E. 450-

2. These Requests sought the following:

1. All communications between Defendants and MRT, LLC, MRT Holdings, LLC, and their agents, including but not limited to James Clements, Zeina Smidi, and Ann Bradshaw.
2. All documents Defendants received from or sent to MRT, LLC, MRT Holdings, LLC, and their agents, including but not limited to James Clements, Zeina Smidi, and Ann Bradshaw.
3. All documents which show Defendants’ funds paid to MRT, LLC, MRT Holdings, LLC, and their agents, including but not limited to James Clements, Zeina Smidi, and Ann Bradshaw.
4. All documents which show funds received by Defendants from MRT, LLC, MRT Holdings, LLC, and their agents, including but not limited to James Clements, Zeina Smidi, and Ann Bradshaw.
5. All documents which show services provided for value by Defendants to MRT, LLC, MRT Holdings, LLC, and their agents, including but not limited to James Clements, Zeina Smidi, and Ann Bradshaw.
6. All documents Defendants signed regarding any investment with MRT, LLC or MRT Holdings, LLC.
7. Any and all checks, canceled checks, letters, bank statements, memoranda or any document of [1368]*1368any kind which would show payment or a transfer of funds to Defendants from MRT, LLC, MRT Holdings, LLC, and their agents, including but not limited to James Clements, Zeina Smidi, and Ann Bradshaw.
8. Any and all checks, canceled checks, letters, bank statements, memoranda or any document of any kind which would show payment or a transfer of funds from Defendants to MRT, LLC, MRT Holdings, LLC, and their agents, including but not limited to James Clements, Zeina Smidi, and Ann Bradshaw.
9. Any and all written or recorded statements or depositions taken from witnesses, lay or expert, concerning any issues in this cause, which are not considered work product.
10. For corporate Defendants (i.e., those who are not individual), all corporate formation documents, all corporate formation documents, including all by-laws, articles of incorporation, corporate filings, and organizational charts.
11. All documents regarding the affirmative defenses asserted in your Answer.

D.E. 450-1 at 4-6.

[2 — ]1. Any documents you have that may support any denial by you of any allegation made in the complaint filed against you.

[2-]2. Any documents that you have to show that MRT was not a Ponzi Scheme.

[2 — ]3. Any documents that you have to show that you paid MRT more money than you received from MRT.

[2 — ]4. Your monthly bank account and brokerage account statements for the period 2005-2007.

D.E. 450-2.

Defendant Morgan responded to the First Request for Production by objecting “on the grounds that the request would require the Defendant to provide information which may incriminate her, and Defendant has a right not to produce such information under the Fifth Amendment of the Constitution of the United States.” D.E. 450-3.

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855 F. Supp. 2d 1364, 2012 U.S. Dist. LEXIS 50396, 2012 WL 1193892, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sallah-v-worldwide-clearing-llc-flsd-2012.