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Securities and Exchange Commission v. Alleca

United States District Court, N.D. Georgia, Atlanta Division

March 5, 2015



WILLIAM S. DUFFEY, Jr., District Judge.

This matter is before the Court on Intervenor Carrie Mistina's ("Mistina") Motion to Intervene [91] ("Motion to Intervene") and Motion to Clarify and/or Modify Order Appointing Receiver [91-1] ("Motion to Clarify"). Also before the Court is Robert D. Terry's ("Receiver") Limited Consent to Motion to Intervene and Opposition to Proposed Intervenor's Motion to Clarify and/or Modify Order Appointing Receiver [95] ("Receiver Response") and the Securities and Exchange Commission's ("SEC") Limited Consent to Carrie Mistina's Motion to Intervene and Opposition to Motion for Relief from Stay [96] ("SEC Response") and Motion for Leave to File a Sur-Reply in Opposition to Motion for Relief from Stay [99] ("Motion for Leave").


This action involves alleged violations of securities laws by Defendants, resulting in significant investment losses to numerous investors. On September 19, 2012, the Court entered a permanent injunction [7] against Defendants enjoining them from violating certain securities laws, freezing Defendants' assets, and requiring an accounting of assets. On September 21, 2012, the Court appointed [9] ("Receivership Order") Robert D. Terry as the Receiver for the estates of Defendants Summit Wealth Management, Inc. ("Summit"), Summit Investment Fund LP, Asset Class Diversification Fund, LP, and Private Credit Opportunities Fund, LLC (the "Receivership Entities"). On November 21, 2012, the Court entered an order [27] ("Modified Receivership Order") authorizing the Receiver to recover and secure the assets of the Receivership Entities.

A. The Virginia Action

On June 7, 2013, Mistina filed a civil action (the "Virginia Action") against Alexandria Capital, LLC ("Alexandria") in the United States District Court for the Eastern District of Virginia (the "Virginia Court").[1] In the Virginia Action, Mistina alleges that, in May 2006, she became Summit's Chief Financial Officer ("CFO"). (Virginia Complaint ¶ 7). Mistina claims that, on August 1, 2011, Summit entered into an asset purchase agreement (the "Agreement") with Alexandria. (Id. ¶ 8). The Agreement provided for Summit to transfer to Alexandria certain investment accounts that had been managed by Richard and Jill Potter (the "Potter Accounts"). (Id.). In return, Summit would receive, among other things, four payments of one-third of the annual fees generated by the Potter Accounts (the "Annual Payments"). (Id.). These payments would be made to Summit during the period October 1, 2012, through October 1, 2015. (Id.). Based on the fees previously generated by the Potter Accounts, the estimated Annual Payments to be made was projected to be between $130, 000 and $210, 000. (Id. ¶ 10).

Mistina alleges that, on August 19, 2012, Summit's President and Chief Executive Officer, Angelo Alleca ("Alleca"), asked Mistina for $30, 000 of her personal funds to pay the premium on Summit's errors and omissions insurance policy. (Id. ¶ 11). In exchange, Alleca offered to assign the Annual Payments to Mistina. (Id. ¶ 12). On August, 21, 2012, Summit executed an agreement, assigning to Mistina Summit's interest in the Annual Payments. (Id. ¶ 13). On August 22, 2012, Alexandria confirmed the agreement to make the Annual Payments to Mistina by check. (Id. ¶ 14).

Mistina alleges that the first of the Annual Payments was due on October 1, 2012. (Id. ¶ 15). Mistina claims that Alexandria did not make the first Annual Payment, and refuses to acknowledge Mistina's right to the Annual Payments. (Id. ¶¶ 15-16).

On July 1, 2013, Alexandria filed, in the Virginia Action, its Motion to Stay Proceedings, arguing that the Receiver had determined that the Annual Payments were assets of the "Receivership Estate" and the Virginia Action must be stayed pursuant to the Modified Receivership Order. (Virginia Action at [5]). On July 24, 2013, the Virginia Court entered an order staying the Virginia Action pending a resolution of Mistina's claims by the Receiver, or entry of an order of this Court lifting the stay. (Virginia Action at [11]).

B. Motion to Intervene

On May 15, 2014, Mistina filed her Motion to Intervene and Motion to Clarify. In her Motion to Clarify, she asserts the same factual allegations contained in the Virginia Complaint, and argues that because she used her personal funds to purchase the investment accounts from Summit, her action was not taken "in her capacity" as CFO, and therefore the Modified Receivership Order does not apply. (Motion to Clarify at 6).

The Receiver and the SEC do not object to Mistina's Motion to Intervene. They do oppose the Motion to Clarify. The Receiver argues that the Motion to Clarify should be denied because: (i) the assignment to Mistina was a fraudulent transfer; and (2) even if it was not a fraudulent transfer, allowing the Virginia Action to proceed would interfere with the orderly administration of the Receivership. (Receiver Response at 4-11). The SEC argues that: (i) Mistina's actions were in her capacity as Summit's CFO; (ii) Mistina's claim "involves" Summit within the meaning of the Modified Receivership Order; and (iii) Mistina's claim involves receivership property. (SEC Response at 6-10).

In Mistina's Reply [98] in support of her Motion to Clarify, she argues that because the SEC and the Receiver assert that her claim arises from a fraudulent conveyance, an evidentiary hearing is required to adjudicate her claim.

On June 25, 2014, the SEC filed its Motion for Leave to request permission to file a Sur-Reply to the Motion to Clarify to oppose the evidentiary ...

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