Today’s ORDER from Judge Mullen contains these interesting and perhaps precedence-like phrases: (emphasis added)
This matter is before the Court upon Named Defendants Trudy Gilmond, Trudy Gilmond, LLC, Jerry Napier, Darren Miller, Durant Brockett, Rhonda Gates, Innovation Marketing LLC, Aaron Andrews, Shara Andrews, Global Internet Formula, Inc., T. Lemont Silver, and Karen Silver’s Motions to Dismiss….. This matter is now ripe for consideration by the Court.
The Court finds that the Defendants predominantly relied on the managerial “efforts of others” ―namely Burks and Rex Venture― to generate profits.
Defendants’ argument that they should not be subjected to the imposition of a constructive trust because their own fraud is not the subject of the complaint fails. The Complaint sets forth allegations sufficient to show that “some other circumstance” makes it inequitable for these Defendants to retain the funds they received. See id. This “other circumstance” is that Defendants received the funds from an admitted Ponzi and pyramid scheme, 3 and that the funds are nothing more than other people’s money wrongfully diverted from RVG. Therefore, Defendants have received property which they “ought not, in equity and good conscience, hold and enjoy.” Id.
(From the Amended Order) 3 “To be clear, the Defendants themselves have not admitted that ZeekRewards was a Ponzi or pyramid scheme. However, the principal, Paul Burks, and certain insiders have made such an admission. In addition, management insiders Dawn Wright-Olivares and Danny Olivares have pleaded guilty to engaging in a securities fraud conspiracy.”
Defendants, as some of the top-dollar ZeekRewards net winners, were early adopters of the ZeekRewards scheme. As a result, these named Defendants may have already dissipated much of their net winnings, which without a constructive trust would be impossible for the Receiver to trace and secure. The Receivership will likely never be able to pay victims of the ZeekRewards scheme the full amount of their losses. Without a constructive trust and the ability to trace fraudulently transferred Receivership Assets, the Receiver’s remedy at law is inadequate. Therefore, the Complaint contains sufficient allegations to warrant the imposition of a constructive trust against the Defendants.
A relationship by which a person who has obtained title to property has an equitable duty to transfer it to another, to whom it rightfully belongs, on the basis that the acquisition or retention of it is wrongful and would unjustly enrich the person if he or she were allowed to retain it.
You can read the full 16 page Order here.
Footnote 3 (above) was Amended in this ORDER.