United States District Court, N.D. Georgia, Atlanta Division
AL B. HILL, as Receiver for Credit Nation Capital, LLC, Credit Nation Acceptance, LLC, Credit Nation Auto Sales, LLC, American Motor Credit, LLC, and Spaghetti Junction, LLC, Plaintiffs,
ANTONIO DUSCIO, WILLIAM CLOW, NEAL JONES, BEVERLY LEVERTON, LYNN LEVERTON, TERRY LUCK, WALTER PADON, and JOYCE WISDOM, Defendants.
OPINION AND ORDER
WILLIAM S. DUFFEY, JR., UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendant Antonio Duscio's
(“Duscio”) Motion to Dismiss Receiver's
Complaint for Damages & Injunctive Relief 
(“Motion to Dismiss”). Also before the Court is
Plaintiff's Motion for Final Default Judgment Against
Defendants Neal Jones (“Jones”), Terry Luck
(“Luck”), and Walter Padon (“Padon”)
[39.3] (“Motion for Default Judgment”).
2009 and 2015, CN Capital raised money by selling
unregistered three-year and five-year promissory notes to
investors. ( ¶ 17). CN Capital allegedly promised
investors a 9% to 11% fixed rate of return and claimed the
promissory notes were “100% asset backed.”
(Id.). CN Capital represented that it used the money
it raised, in part, to purchase life insurance policies,
which supposedly resulted in a profit whenever an
insured's death benefit on the policy was greater than
the total of the purchase price and premiums paid.
(Id. ¶ 18). CN Capital also represented that
the insurance policies involved life expectancies of three to
four years and that it expected to receive a fifteen percent
annual return on its portfolio of life insurance settlements.
(Id. ¶ 19). CN Capital sold fractional
interests in the policies to investors through its affiliate,
Credit Nation Acceptance, LLC. (Id. ¶ 20).
to Plaintiff, CN Capital, however, was never profitable-
“[i]nstead, it was insolvent from [its]
inception.” (Id. ¶ 21). CN Capital made a
number of false representations to its investors, and failed
to inform its investors that that the promissory notes they
purchased were in fact unsecured and unsafe investments, that
the insurance policies involved life expectancies far longer
than three to four years, that CN Capital was losing millions
of dollars each year, and that the securities they were
investing in should have been, but were not, registered with
the SEC. (Id. ¶¶ 24-25, 27-28). Plaintiff
states that “[f]rom its inception, CN Capital was a
Ponzi scheme, ” in which “[i]nvestors could only
receive ‘returns' on their investments so long as
new investment money could be brought in to pay interest
payments to prior noteholders and pay insurance
premiums.” (Id. ¶ 29). Plaintiff states
that the “vast majority of investors”-most of
which were “elderly people on fixed incomes who have
been defrauded out of their life savings”-have lost
millions of dollars. (Id. ¶ 32).
Defendants-also investors- allegedly invested their money in
the promissory notes and life insurance policies, but, unlike
the others, received back the full amounts of their
investments plus additional payments denominated as interest.
(Id. ¶ 33). Defendants thus allegedly profited
by receiving money paid in by other investors.
November 10, 2015, the United States Securities and Exchange
Commission (“SEC”) filed a complaint seeking
injunctive relief and damages against James A. Torchia
(“Torchia”) and the Receivership Companies. The
case is currently pending in the Northern District of Georgia
as Civil Action No. 1:15-cv-3904-WSD. The SEC alleges that
Torchia directed, and the Receivership Companies participated
in, fraudulent investment schemes such as the ones described
above relating to CN Capital. On April 25, 2016, the Court
entered an order granting a preliminary injunction freezing
the assets of Torchia and the Receivership Companies and
appointing the Receiver. (No. 1:15-cv-3904-WSD ).
December 28, 2016, Plaintiff filed his Complaint  in this
action on behalf of the Receivership alleging that certain
interest paid to Defendants on the investments they purchased
from CN Capital constituted fraudulent transfers, unjust
enrichment, and money had and received. Plaintiff is seeking
to recover those interest payments and, with respect to
Defendant Duscio only, a viatical insurance policy that, at
the time the Complaint was filed, had not yet matured.
(Id. at 19-20). Plaintiff contends that, “[i]n
total, Duscio transferred $1.7 million to Synergy Motor
Company and Credit Nation Auto Sales, and Torchia caused CN
Capital to pay Duscio $2, 051, 365.62, which is $351, 365.62
more than Duscio's investment.” (Id.
¶ 43). Plaintiff alleges Jones “invested $50, 000
and received back $64, 250, which is $14, 250 more than he
invested.” (Id. ¶ 53). Plaintiff further
alleges “Luck invested $75, 639.32 and received back
$99, 110.34, which is $23, 471.02 more than he
invested.” (Id. ¶ 66). Finally, Plaintiff
contends that “in total, Padon invested $70, 000 and
received back $89, 950, which is $19, 950 more than he
invested.” (Id. ¶ 70).
March 29, 2017, the Court granted Plaintiff Al B. Hill's
and Defendant Joyce Wisdom's Joint Motion to Dismiss
Claims Against Defendant Wisdom  and dismissed
Plaintiff's claims against Wisdom with prejudice. ().
On April 14, 2017, the Court granted Defendants Beverly
Leverton's and Lynn Leverton's and Plaintiff Al B.
Hill's Joint Motion to Dismiss Claims Against the
Leverton Defendants  and dismissed the claims against the
Leverton's with prejudice. ().
April 12, 2017, Duscio filed his Motion to
Dismiss. Duscio asserts that (1) Plaintiff fails to
state a claim upon which relief may be granted pursuant to
Fed.R.Civ.P. 12(b)(6); (2) the claims of fraud are not stated
with particularity as required by Fed.R.Civ.P. 9(b); (3) the
Court lacks subject matter jurisdiction; and (4) Plaintiff
lacks standing . Duscio specifically contends that the
Complaint fails to specify the fraudulent transfers statute
under which Plaintiff seeks to hold Duscio liable and
otherwise fails to sufficiently plead the required elements
to allege that Duscio transfers that were fraudulent. (
at 5). Duscio also argues that Plaintiff has failed to plead
unjust enrichment because an express contract exists between
CN Capital and Duscio for the investments, and “Georgia
courts have consistently rejected claims for unjust
enrichment where, as here, there is an enforceable contract
that governs the rights and obligations of the
parties.” (Id. at 14). Duscio employs the same
reasoning to support why he argues that Plaintiff has failed
to state a claim for money had and received. He asserts:
“Like the unjust enrichment claim, the money had and
received claim should be dismissed based on the existence of
Duscio's contracts with Receivership [Companies] as the
theory of money had and received ‘applies only when
there is no actual legal contract.'” (Id.
at 15). On April 26, 2017, Plaintiff filed his Brief in
Opposition to Defendant Duscio's Motion to Dismiss 
August 10, 2017, Plaintiff filed his Motion for Default
Judgment against Jones, Luck, and Padon. Plaintiff contends
that “[d]espite due and proper service, [Jones, Luck,
and Padon] have failed to plead, defend, or otherwise respond
to the Summons and Complaint served on them within the time
prescribed by the Federal Rules of Civil Procedure, i.e.,
Neal Jones, by January 31, 2017; Terry Luck, by February 1,
2017; and Walter Padon, by January 30, 2017.” ([39.3]
at 2). Plaintiff further alleges that, “[b]y failing to
plead or otherwise respond, the [d]efaulting Defendants have
admitted each paragraph of Plaintiff's Complaint,
specifically including those paragraphs and statements
concerning the fraudulent transfers directed to the
[d]efaulting Defendants in furtherance of the Ponzi scheme
while CN[Capital] was insolvent, and also including their
liability for unjust enrichment and money had and received.
Additionally, the Defaulting Defendants admit those
paragraphs setting forth the amounts claimed by Plaintiff,
including interest.” ([39.3] at 4) (citations omitted).
Motion to Dismiss
motion to dismiss pursuant to Rule 12(b)(6) of the Federal
Rules of Civil Procedure, the Court must “assume that
the factual allegations in the complaint are true and give
the plaintiff the benefit of reasonable factual
inferences.” Wooten v. Quicken Loans, Inc.,
626 F.3d 1187, 1196 (11th Cir. 2010). Although reasonable
inferences are made in the plaintiff's favor,
“‘unwarranted deductions of fact' are not
admitted as true.” Aldana v. Del Monte Fresh
Produce, N.A., 416 F.3d 1242, 1248 (11th Cir. 2005)
(quoting S. Fla. Water Mgmt. Dist. v. Montalvo, 84
F.3d 402, 408 n.10 (11th Cir. 1996)). Similarly, the Court is
not required to accept conclusory allegations and legal
conclusions as true. See Am. Dental Ass'n v. Cigna
Corp., 605 F.3d 1283, 1290 (11th Cir. 2010) (construing
Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell
Atl. Corp. v. Twombly, 550 U.S. 544 (2007)).
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). Mere “labels and conclusions”
are insufficient. Twombly, 550 U.S. at 555. “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Iqbal, 556 U.S. at 678 (citing
Twombly, 550 U.S. at 556). This requires more than
the “mere possibility of misconduct.” Am.
Dental, 605 F.3d at 1290 (quoting Iqbal, 556
U.S. at 679). The well-pled allegations must “nudge
their claims across the line from conceivable to
plausible.” Id. at 1289 (quoting
Twombly, 550 U.S. at 570).
Motion for Default Judgment
55(b) of the Federal Rules of Civil Procedure provides that
default judgment may be entered against defaulting defendants
(1) By the Clerk. If the
plaintiff's claim is for a sum certain or a sum that can
be made certain by computation, the clerk-on the
plaintiff's request, with an affidavit showing the amount
due-must enter judgment for that amount and costs against a
defendant who has been defaulted for not appearing and who is
neither a minor nor an incompetent person.
(2) By the Court. In all other
cases, the party must apply to the court for a default
judgment. . . . If the party against whom a default judgment
is sought has appeared personally or by a representative,
that party or its representative must be served with written
notice of the application at least 7 days before the hearing.
The court may ...