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IN THE UNITED STATES DISTRICT COURT


DISTRICT OF SOUTH CAROLINA
ANDERSON/GREENWOOD DIVISION
IN RE:
RECEIVER FOR BONNIE GENE
WILSON AND ATLANTIC BULLION
& COIN, INC.

I.

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CIVIL ACTION NO. 8:12-cv-02078JMC


Memorandum in Support of Motion in
Support of Unresolved Objections by
the National Credit Union
Administration Board Acting in its
Capacity as Liquidating Agent for
Taupa Lithuanian Credit Union, Inc.

PROCEDURAL BACKGROUND
On October 15, 2014, the National Credit Union Administration Board, acting in its

capacity as Liquidating Agent for Taupa Lithuanian Credit Union, Inc. (the Liquidating Agent),
filed a claim (the Claim) with Beattie Ashmore, Receiver for Bonnie Gene Wilson and Atlantic
Bullion & Coin (the Receiver). For ease of reference, a copy of said Claim is attached hereto as
Exhibit A. The Liquidating Agents Claim requested the return of $100,000.00 John W. Struna
misappropriated from Taupa Lithuanian Credit Union, Inc. (Taupa) and transferred to Atlantic
Bullion & Coin (AB&C). The Liquidating Agents Claim was timely and properly filed in
accordance with the instructions and other requirements set forth on the Receivers CourtApproved Proof of Claim Form. Walt Tollison, Esq., attorney for the Receiver, advised that the
Liquidating Agent may supplement its Claim to include a legal brief more fully setting forth the
Liquidating Agents Claim and the law in support of the Liquidating Agents request for return of
the entirety of its claim ($100,000.00) from AB&C, which the Liquidating Agent did on December
10, 2014 (the Supplement), which is attached hereto as Exhibit B. On February 3, 2016, the
Liquidating Agent submitted to the Receiver, an Objection to Claim Form, a copy of which is
attached hereto as Exhibit C.

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The Liquidating Agents February 3rd correspondence requested that the Receiver make a
determination of the Liquidating Agents claim as a creditor of AB&C. However, the Receiver
simply accepted the claim on the basis that the Liquidating Agent was as an investor that would
receive distributions on par with all other accepted investor claims. The Liquidating Agent agrees
that at a minimum it is entitled to recover on par with all other investors under the rising tide
distribution method. That being said, for the reasons set forth herein, the Liquidating Agent is
entitled to receive the entirety of the $100,000.00 transferred by Struna to AB&C, prior to any
distributions to any other investor, pursuant to 12 U.S.C. 1787(b)(16) and other applicable
provisions of the Federal Credit Union Act, including but not limited to 12 U.S.C. 1787(g).
Further, the Receiver is unable to successfully maintain its position, while also failing to exhaust
administrative remedies. As such this Court is without jurisdiction to hear the Receivers defense
pursuant to 12 U.S.C. 1787(b)(13)(D).
II.

FACTUAL BACKGROUND
A.

Receiver Appointment

On July 30, 2012, Ronnie Gene Wilson (Wilson) and AB&C pled guilty to two counts
of mail fraud stemming from their involvement in a criminal Ponzi scheme involving hundreds of
victims and millions of dollars. See United States v. Ronnie Gene Wilson, et al, 8: 12-cr-320-JMC
(AB&C Litigation). Pursuant to a federal court order, the Receiver is tasked with assuming
management and control over all the financial and business affairs for a number of individuals and
companies (collectively, AB&C Receivership Entities). The court Order requires the Receiver,
among other things, to locate and manage assets previously acquired by and/or in the
name/possession of the AB&C Receivership Entities. Additionally, the Receiver is tasked with
receiving claims submitted by, among others, bilked investors.
B.

AB&C Scheme
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As part of the fraudulent investment scheme, Wilson, through his company AB&C and
other agents, recruited individuals to invest in the purported purchase and sale of silver holdings.
Investors were promised high rates of returns on their investment.
On or about November 12, 2011, John W. Struna (Struna) fraudulently obtained
$25,000.00 from Taupa. That same day, Struna fraudulently transferred this amount to AB&C
from an account maintained by Struna at Taupa. Strunas fraudulent scheme (i.e., to obtain money
from Taupa and transfer it to AB&C) was repeated 3 more times in December of 2011.1 Each time
Struna fraudulently obtained $25,000.00 from Taupa; and each time the funds were immediately
transferred to AB&C. In total, Struna fraudulently transferred $100,000.00 to AB&C between
November 12, 2011 and December 20, 2011. The amounts Struna transferred to AB&C were
purportedly designated in the AB&C books and records as Account No. 10401, in the name of
John Struna.
AB&C was determined to be nothing more than a Ponzi scheme. By definition, a Ponzi
scheme is a fraudulent investment scheme whereby investors are promised certain returns for
investing, however, in reality the returns are received from new investors solicited into the Ponzi
scheme. Thus, AB&C was not a legitimate business, and it merely operated by paying old
investors with new investors money. Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1088 n.3
(2d Cir. 1995); Bear, Stearns Sec. Corp. v. Gredd (In re Manhattan Inv. Fund Ltd.), 397 B.R. 1,
12 (S.D.N.Y. 2007) ([T]he label Ponzi scheme has been applied to any sort of inherently
fraudulent arrangement under which the debtor-transferor must utilize after-acquired investment
funds to pay off previous investors in order to forestall disclosure of the fraud.)

On or about December 15, 2011, December 18, 2011, and December 20, 2011, Struna fraudulently obtained
$25,000.00 from Taupa, and that same day, Struna fraudulently transferred these funds to AB&C.

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As part of the AB&C Ponzi scheme, some investors received substantial returns and profits
through payments of ill-gotten gains from AB&C, while other investors lost large sums of money
with no return or profit. Struna fell into the latter category. Struna never received a return and
never profited from the money he transferred to AB&C.

In other words, Struna invested

$100,000.00 with AB&C and received nothing in return. However, since Struna transferred money
from Taupa with the intention of defrauding Taupa, the absence of any return by Struna is of no
impact on him individually.
Conversely, the Liquidating Agent, and independently, the United States Attorneys
Office, were left with tracking down and recovering funds Struna wrongfully obtained and
transferred from Taupa to various recipients. As an example, the Liquidating Agent obtained
Orders from the United States District Court, Northern District of Ohio, to attach an account at
Huntington National Bank standing in the name of Strunas wife, Vilija Struna. The Liquidating
Agent also obtained an Order from the United States District Court to attach a business known as
Sunny Street Caf that Struna started with money obtained from Taupa. After Taupas liquidation,
Struna transferred Sunny Street Caf to his wife, Vilija. The Liquidating Agent obtained the relief
sought when attaching assets of the Strunas by exercising the powers afforded the Liquidating
Agent under 12 U.S.C. 1787(b)(2)(G). Likewise, the United States Attorneys Office obtained
an Order of forfeiture to recover property owned by an entity named JV Florida, LLC that acquired
real property with money Struna wrongfully obtained from Taupa. Indeed, Struna engaged in a
pattern of conduct the purpose of which was to wrongfully obtain funds from Taupa then transfer
the funds in such a manner to defraud Taupa. Now the Liquidating Agent stands in Taupas shoes,
as by operation of law the Liquidating Agent has succeeded to all rights, title, powers, and
privileges of the credit union. 12 U.S.C . 1787(b)(2)(A)
C.

Liquidation of Taupa
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The National Credit Union Administration (the NCUA) is an independent agency of the
Executive branch of the United States government that insures both federal and, at times, state
chartered credit unions. The NCUA is managed by the National Credit Union Administration
Board (the NCUA Board) pursuant to 12 U.S.C. 1752(a).
Taupa was, at all times relevant herein, a state chartered, federally insured, credit union
with its principal place of business located at 767 E. 185th St., Cleveland, Ohio 44119. Thus,
Taupa was an insured credit union within the meaning of 12 U.S.C. 1752(7).
On or about July 12, 2013 (the Liquidation Date), the Superintendent of the Ohio
Division of Financial Institutions issued an Order Revoking the Articles of Incorporation (of
Taupa) and Appointing a Liquidating Agent (i.e., the NCUA Board) (the Revocation Order).
On or about July 15, 2013, the NCUA Board accepted the appointment as Liquidating Agent
pursuant to the applicable provisions of 12 U.S.C. 1787(a)(1)(A) and 1787(j). The Liquidating
Agent, by operation of law, succeeded to all rights, title, powers and privileges of Taupa, and title
to the credit unions books, records and assets, pursuant to 12 U.S.C. 1787(b)(2)(A).
On August 20, 2014, Struna was indicted in the United States District Court for the
Northern District of Ohio on charges of 1) bank fraud, 2) conspiracy to commit bank fraud, 3)
making false statements to financial institution, and 4) money laundering. See United States of
America v. John Struna, 1:14-cr-00275-JG. All of the charges against Struna relate to his conduct
in misappropriating and unlawfully obtaining money from Taupa. On November 17, 2014, Struna
pled guilty to all charges in the Indictment. Id.
On October 3, 2014, the Liquidating Agent filed a Complaint against Struna and related
entities in the United States District Court for the Northern District of Ohio. See National Credit
Union Administration Board, acting in its capacity as Liquidating Agent for Taupa Lithuanian
Credit Union, Inc. v. John Struna et al., 1:14-cv-02199-JRA. As part of this lawsuit, the
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Liquidating Agent also sought, in accordance with 12 U.S.C. 1787(b)(2)(G), to attach a claim
that Struna could file with the Receiver relating to the $100,000.00 Struna fraudulently obtained
from Taupa and subsequently transferred to AB&C. On October 10, 2014, the Liquidating Agent
and Struna entered into an Agreed Order permitting an attachment of the AB&C Claim, and
subsequently the Liquidating Agent and Struna resolved their dispute by consent judgment.
Subsequently, as set forth above, the Liquidating Agent, through its Claim, advised the
Receiver that the Liquidating Agent is further exercising its power to set aside and recover the
$100,000.00 transferred by Struna to AB&C pursuant to 12 U.S.C. 1787(b)(16). The effect of
the Liquidating Agent setting aside the transfer under 12 U.S.C. 1787(b)(16) is that the initial
transfer of funds from Struna to AB&C is void ab initio. In other words, AB&C never acquired
any rights, title or interest in the $100,000.00. See, 12 U.S.C. 1787(b)(16)(D); See also, FDIC
v. Jahn 828 F. Supp. 2d 305 (Dist. Col. 2011). The only available defense set forth in 12 U.S.C.
1787(b)(16)(C) is wholly inapplicable because AB&C was not a bona fide taker for value
because it was a Ponzi scheme.
III.

LEGAL ANALYSIS
A.

The Liquidating Agent is Entitled to Avoid and Recover the Fraudulent


Transfers Struna Made to AB&C.

The powers afforded the Liquidating Agent, by 12 U.S.C. 1787(b)(16)(B) are direct and
unambiguous. Pursuant to 12 U.S.C. 1787(b)(16), the Liquidating Agent is entitled to avoid and
recover any fraudulent transfers made within 5 years of the Liquidating Agents appointment if
the transferee does not take for value and in good faith.
The Federal Credit Union Act (FCUA) is a comprehensive scheme designed to protect
the interests of creditors of failed credit unions, such as Taupa. NCUA Bd. v. Lormet Cmty. Fed.
Credit Union, 2010 U.S. Dist. LEXIS 122379 (N.D. Ohio, Nov. 17, 2010). Specifically, 12 U.S.C.
1787(b)(16)(A) provides the following:
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In general. The Board, as conservator or liquidating agent for any insured


credit union, may avoid a transfer of any interest of an institution-affiliated
party, or any person who the Board determines is a debtor of the institution, in
property, or any obligation incurred by such party or person, that was made
within 5 years of the date on which the Board becomes conservator or
liquidating agent if such party or person voluntarily or involuntarily made such
transfer or incurred such liability with the intent to hinder, delay, or defraud the
insured credit union or the Board.
To further evidence the broad authority afforded the Liquidating Agent, the Court needs to
look no further than 12 U.S.C. 1787(g). In whole, 12 U.S.C. 1787(g) provides:
Except as provided in this section, no court may take any action,
except at the request of the Board of Directors by regulation or
order, to restrain or affect the exercise of powers or functions of the
Board as a conservator or a liquidating agent.
Despite this very clear expression of the Liquidating Agents authority, the Receiver is
seeking to restrain and affect the Liquidating Agents exercise of its powers in conflict with 12
U.S.C. 1787(g).

Specifically, the Receiver is refusing to return the entirety of Strunas

$100,000.00 transfer to AB&C that the Liquidating Agent avoided in accordance with 12 U.S.C.
1787(b)(16)(A).
By assuring that this $100,000.00 is available to reduce the loss to the estate of a liquidated
credit union, the cost to the National Credit Union Share Insurance Fund (NCUSIF),2 which
insures member deposits in federally-insured credit unions across the United States, will also be
reduced. This reduction in cost to the NCUSIF furthers the important public interest in maintaining
a strong, healthy, self-sustaining federal insurance fund. Unlike any other investor who voluntarily
invested personal assets, the Liquidating Agent is seeking to recover money wrongfully obtained
and fraudulently transferred by Struna from a federally insured credit union. Further, unlike the
other investors seeking to recover funds from AB&C for their personal benefit, the Liquidating

The NCUSIF is a revolving fund used by the NCUA Board to carry out certain functions, pursuant to the Federal
Credit Union Act. 12 U.S.C. 1783(a).

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Agent is performing a public function in accordance with all powers afforded it under the FCUA,
12 U.S.C. 1751 et seq. to minimize the loss to the NCUSIF.
Congress recognized the significance of expanding the powers afforded to the Liquidating
Agent, thus protecting federally insured financial institutions. For example, the powers afforded
the Liquidating Agent to void and recover fraudulently transferred assets, which rights are superior
to a trustee under Title 11 (see e.g., 12 U.S.C. 1787(b)(16)(D)), were enacted through the Crime
Control Act of 1990. Specifically, House Bill 8758 (136 Cong. Rec. H. 8758) included SEC. 2123.
DISALLOWING USE OF BANKRUPTCY TO EVADE COMMITMENTS TO MAINTAIN
THE CAPITAL OF A FEDERALLY INSURED DEPOSITORY INSTITUTION OR TO EVADE
CIVIL OR CRIMINAL LIABILITY. This section adopted the above referenced 12 U.S.C.
1787(b)(16), thus, evidencing Congress clear intent that the Liquidating Agent should be afforded
the utmost priority in recovering assets for the benefit of the NCUSIF and that individual debtors
should not defeat these rights, such as through filing bankruptcy. Similar powers existed and predate that Crime Control Act of 1990, including 12 U.S.C. 1787(g) cited above.
To date, the Receivers only argument in defense of his refusal to acknowledge the
Liquidating Agents powers under the FCUA is that a Receiver is different from a trustee in
bankruptcy, and a Receiver sits in equity rather than being subject to a statutory scheme such as a
bankruptcy trustee. The Liquidating Agent submits that the Receivers argument is of no import
to the analysis. Simply put, the Liquidating Agent exercised its powers to first attach Strunas
transfer in accordance with 12 U.S.C. 1787(b)(2)(G), then avoid same in accordance with 12
U.S.C. 1787(b)(16). On account of the Liquidating Agent exercising its powers, no Court may
issue an order that restrains or affects the Liquidating Agents exercise of its powers. 12 U.S.C.
1787(g). Accordingly, since a Court does not have authority to restrain the Liquidating Agents
powers, certainly the Receiver is without such authority. Admittedly, the Receiver is not a trustee
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in bankruptcy. However, this alleged distinguishing fact does not, and cannot, invalidate the
balance of 12 U.S.C. 1787(b)(16). It is pursuant to 12 U.S.C. 1787(b)(16)(A) and (B) that the
Liquidating Agent voided the transfer to AB&C, and is entitled to recover the entire $100,000.00.
In effect, the Receivers defense goes beyond restraining or affecting the Liquidating
Agent powers. The Receiver seeks an order denying the Liquidating Agents claim for return of
the entire $100,000.00, and thus negating the Liquidating Agents powers. Consistent with
Congress clear intent when enacting Section 2123 of the Crime Control Act of 1990
(DISALLOWING USE OF BANKRUPTCY TO EVADE COMMITMENTS TO MAINTAIN
THE CAPITAL OF A FEDERALLY INSURED DEPOSITORY INSTITUTION OR TO EVADE
CIVIL OR CRIMINAL LIABILITY), the Liquidating Agent should be entitled to an order
requiring the Receiver to distribute to the Liquidating Agent the entire $100,000.00 transferred by
Struna to AB&C. Upon information and belief, the Crime Control Act of 1990 merely addressed
a trustee in bankruptcy because other sections of the United States Code, namely those found in
Title 11, vested the trustee with competing powers. Congress sought to resolve the conflict in
favor of the Liquidating Agent. Congress did not need to address the powers of a Receiver,
because as stated by the Receiver himself, the Receiver is not vested with statutory authority.
Thus, no conflicting powers between the Liquidating Agent and Receiver exist, and certainly, the
Receiver remains subject to all powers afforded the Liquidating Agent under the FCUA.
Struna owes the Liquidating Agent in excess of $2 million, and the Liquidating Agent has
exercised all powers afforded to it to recover assets, attach assets, and void transfers in order to
minimize the loss to the NCUSIF. Now, in contravention of the express language of 12 U.S.C.
1787(g), the Receiver seeks an order restraining and, in fact, altogether negating the powers of the
Liquidating Agent. The United States District Court for the Northern District of Ohio has
previously addressed 12 U.S.C. 1787(g) and its impact on the Liquidating Agents post9

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receivership powers in NCUAB v. Zovko, Case No. 1:13-cv-01430-SO.3 In Zovko, the court cited
to Courtney v. Halleran, 485 F.3d 942, 948 (7th Cir. 2007) in holding that because of the powers
specifically granted by 12 U.S.C. 1787(g):
the regulatory conduct of the liquidating agent falls under the discretionary function
exception and qualifies as a protected discretionary function. Courtney v.
Halleran, 485 F.3d 942, 948 (7th Cir. 2007); Freeman v. FDIC, 56 F.3d 1394, 1399
(D.C. Cir. 1995) (The exercise of these powers [under 12 U.S.C. 1821] may not
be restrained by any court, regardless of the claimants likelihood of success on the
merits of his underlying claims.). In Halleran, the Seventh Circuit held that 12
U.S.C. 1821, the FDIC equivalent to the FCUAs 1787, broadly prohibited suit
against the FDIC due to its post-receiver decisions regarding the disposition of bank
assets. Halleran, 485 F.3d at 948 (The Ninth Circuit described the ban as an
essential part of the FDICs ability to function as a receiver.) (citing Sahni v.
American Diversified Partners, 83 F.3d 1054, 1058 (9th Cir. 1996)).
See, Zovko Order (Ex. D) at p. 11.
The Court in Zovko went on to hold that the liquidating agent has broad discretionary
powers to maintain and dispose of a credit unions assets post-liquidation. See Zovko (Ex. D) at
p. 12, citing Mahajan, 923 F. Supp. 2d at 1140 (In affirming Congresss intention to create a
broad injunction against court interference with the FDICs ongoing exercise of its powers as a
receiver . . . the Seventh Circuit noted that there are specific provisions of FIRREA that permit the
FDIC to act in a discretionary manner that is not subject to review[,] . . . [including the ability to]
transfer assets or liability without any further approvals.).4
Based on the foregoing, the Liquidating Agent is entitled to recover the entire amount of
its claim for $100,000.00 in accordance with 12 U.S.C. 1787(b)(16).
B.

The Receiver Must Exhaust Administrative Remedies.

The Receiver, in denying the Liquidating Agents request for return of the $100,000.00, is
seeking, and in fact making, a determination of rights with respect to assets of the Liquidating

Attached hereto as Exhibit D is the Courts Order granting the Liquidating Agents Motion to Strike Affirmative
Defenses in Zovko.
4
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. No. 101-73.
3

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Agent. No Court has jurisdiction over any claims, including those of the Receiver, seeking a
determination of rights to an asset of the Liquidating Agent unless the claimant, the Receiver in
this case, exhausted administrative remedies. In this case, the Liquidating Agent avoided Strunas
transfer of $100,000.00 to AB&C in accordance with 12 U.S.C 1787(b)(16). The Receiver
refused to return the $100,000.00 and advised the Liquidating Agent that it must submit itself to
the jurisdiction of the Court. The Receivers refusal is in direct contravention to the express
language of 12 U.S.C. 1787(b)(13)(D). As such, the Receiver must either return the entire
$100,000.00 or comply with the requirements of the administrative claims process.
The FCUA explicitly limits a courts jurisdiction over actions seeking determinations with
respect to assets of the Liquidating Agent, in this case the right to return of the $100,000.00
fraudulently transferred by Struna to AB&C. Specifically, 12 U.S.C. 1787(b)(13)(D) provides:
(D) Limitation on judicial review. Except as otherwise provided
in this subsection, no court shall have jurisdiction over
(i) any claim or action for payment from, or any action seeking a
determination of rights with respect to, the assets of any credit
union for which the Board has been appointed liquidating agent,
including assets which the Board may acquire from itself as such
liquidating agent; or
(ii) any claim relating to any act or omission of such credit union or
the Board as liquidating agent. [Emphasis added.]
Under FIRREA, Congress established a mandatory administrative claims process to
provide a mechanism for resolving as promptly and efficiently as possible all claims against failed
financial institutions. See, e.g., Sicherman v. NCUA Bd., 535 B.R. 196 (N.D. Ohio 2015) (holding
that Bankruptcy Court was without jurisdiction over the Trustee's action to determine rights to the
real property); see also, Maher v. FDIC, 441 F.3d 522, 525 (7th Cir. 2006); Maher v. Harris Trust
& Sav. Bank, 75 F.3d 1182, 1190-91 (7th Cir. 1996); Intercontinental Travel Mktg., Inc. v. FDIC,
45 F.3d 1278, 1282-83 (9th Cir. 1994); Henderson v. Bank of New England, 986 F.2d 319, 321 (9th
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Cir. 1993); accord Bueford v. RTC, 991 F.2d 481, 484 (8th Cir. 1993); Meliezer v. RTC, 952 F.2d
879, 882 (5th Cir. 1992). As the United States Court of Appeals for the Fifth Circuit has explained
with respect to the FDIC, which is equally applicable here:
To assure that the RTC or Federal Deposit Insurance Corporation
could deal expeditiously with failed depository institutions,
Congress created a new claims determination procedure by which
the creditors of a failed institution may be required to first present
their claims to the Receiver for administrative consideration before
pursuing a judicial remedy. 12 U.S.C. 1821(d)(3).
Meliezer, 952 F.2d at 881 (footnote omitted). Requiring exhaustion of the mandatory claims
process fulfills the purpose of FIRREA to ensure that the assets of a failed institution are
distributed fairly and promptly among those with valid claims against the institution, and to
expeditiously wind up the affairs of the institution. McCarthy v. FDIC, 348 F.3d 1075, 1079 (9th
Cir. 2003) (quoting Freeman v. FDIC, 56 F.3d 1394, 1401-02 (D.C. Cir. 1995)).
Pursuant to FIRREA, Congress set forth the powers, rights, and duties of the NCUA Board
when it is acting as Liquidating Agent of a failed financial institution. FIRREA provides the claims
procedures against receivers or liquidating agents for banks (Federal Deposit Insurance
Corporation or FDIC), savings and loan associations (Resolution Trust Corporation or RTC) and
federal credit unions (National Credit Union Administration or NCUA). See, 12 U.S.C. 1821
(FDIC claims), 1441a (RTC claims), and 1787 (NCUA claims). These provisions in the various
code sections are identical in all material respects. Case law construing any of these provisions,
therefore, applies with equal force to all comparable provisions. Estate of Underwood v. National
Credit Union Admin., 665 A.2d 621, 627 (D.D.C. 1995). A creditor who wishes to pursue a claim
against a failed institution or its assets must present that claim to the liquidating agent, which in
this case is the NCUA Board, acting in its capacity as Liquidating Agent. Maher v. Harris Trust
& Sav. Bank, 75 F.3d 1182, 1190 (7th Cir. 1996). See also, NCUAB v. Lormet Community Federal
Credit Union, 2010 U.S. Dist. LEXIS 122379 (N.D. Ohio 2010) (describing that the [Federal
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Credit Union] Act precludes judicial review until after the administrative claims procedure is
complete). See also, Natl Union Fire Ins. Co. of Pittsburgh, PA v. City Sav. F.S.B., 28 F. 3d 376,
392 (3rd Cir. 1994) (holding that the language contained in 1821(d)(13)(D) barring any action
seeking a determination of rights is not limited in its application to actions brought by creditors;
it applies to debtors as well, and applies regardless of whether the action is asserting a right to
payment).
As recognized by the United District Court for the Northern District of Ohio, the FCUA is
comprehensive federal legislation designed to protect all depositors and creditors of federal credit
unions. See, Lormet. The FCUA established a procedure for claimants, such as the debtor5, to
submit claims against liquidated credit unions, the procedure for the determination of such claims,
and otherwise restricts courts of jurisdiction over any action seeking a determination of rights with
respect to assets of the Liquidating Agent. Id.; See also, 12 U.S.C. 1787(b)(3), 1787(b)(5) and
1787(b)(13)(D), and 12 C.F.R. 709.6. Title 12, 709.6 of the Code of Federal Regulations
provides as follows:
Initial determination of creditor claims by the liquidating
agent.
(a)(1) Any party wishing to submit a claim against the liquidated
credit union must submit written proof of claim in accordance with
the requirements set forth in the notice to creditors. A failure to
submit a written claim within the time provided in the notice to
creditors shall be deemed a waiver of said claim and claimant
shall have no further rights or remedies with respect to such
claim. [Emphasis added.]
Thereafter, 12 C.F.R. 709.6(d) provides:
(d) If a claim or any portion thereof is disallowed, the notice to the
claimant shall contain a statement of the reasons for the
disallowance and an explanation of rights pursuant to Section
709.7 of this part.
5

The Receiver is a debtor of the Liquidating Agent as the Liquidating Agent avoided a transfer and has the right to
recover same under 12 U.S.C. 1787(b)(16)(A)-(B), yet the Receiver is refusing to return same.

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The FCUA vests the Liquidating Agent with authority to determine claims. 12 U.S.C.
1787(b)(3). The Liquidating Agent is further vested with authority to disallow claims. In this
regard, 12 U.S.C. 1787(b)(5)(D) provides:
Authority to disallow claims. The liquidating agent may disallow
any portion of any claim by a creditor or claim of security,
preference, or priority which is not proved to the satisfaction of the
liquidating agent.
The failure of the Receiver to not only exhaust administrative remedies, but to timely
exhaust such remedies is detrimental to the Receivers ability to refuse to return the entirety of the
$100,000.00 sought to be returned to the Liquidating Agent in accordance with 12 U.S.C.
1787(b)(16)(B).

The Receiver must not only timely file a creditors claim, but once a

determination is made with respect to such claim, the determination must be timely appealed. A
claim that is disallowed as being untimely shall be final. 12 U.S.C. 1787(b)(5)(C)(i). But see,
12 U.S.C. 1787(b)(5)(C)(ii). Similarly if a claimant fails to request administrative review of a
claim or file suit on such claim in a timely manner, then the claim shall be deemed to be
disallowed.such disallowance shall be final, and the claimant shall have no further rights or
remedies with respect to such claim. 12 U.S.C. 1787(b)(6)(B).
Adhering to the administrative claims process is mandatory for all parties asserting claims
against a failed institution for which a Liquidating Agent has been appointed. See, Bueford v.
RTC, 991 F.2d 481, 485 (8th Cir. 1993) (citations omitted). Exhaustion of the administrative claims
process is explicitly jurisdictional. Rosa v. RTC, 938 F.2d 383, 395 (3rd Cir. 1991). The FCUA
limits, and, in fact, prohibits, any court from having jurisdiction with respect to the Liquidating
Agent except as set forth in the FCUA, and the Receiver cannot simply compel the Liquidating
Agent to submit to jurisdiction of the Court as it is the Receiver that has the express obligation to
exhaust administrative remedies with the Liquidating Agent. As such, the Receiver must either
14

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return the $100,000.00 as demanded by the Liquidating Agent or exhaust administrative remedies
by filing a claim with the Liquidating Agent.
Finally, the United States Court of Appeals for the Fourth Circuit recognized that the failure
to exhaust administrative remedies is detrimental to a party, even if such partys action was
commenced prior to the appointment of a liquidating agent. See, Brady Development Co. v. RTC,
14 F.3d 998 (4th Cir. 1994). In this case, the Receivers action was pending prior to the
appointment of the Liquidating Agent, but in order for the Receiver to maintain its defense against
the Liquidating Agents Claim, the Receiver must follow the administrative claims process. The
Fourth Circuit interpreted the relevant statute as follows:
The statute further states that the claimant mayfile suit on
such claim (or continue an action commenced before the
appointment of the receiver) in the district court or territorial
court of the United States 12 U.S.C. 1821(d)(6)(A). Under
this provision a claimant may continue a previously filed action
after the administrative process has be completed if he had a suit
pending against the savings and loan before the savings and loan
was placed into receivership. Congress clearly envisioned that
administrative and judicial review of claims could not take place
simultaneously.
Id. at 1003. The Liquidating Agents assertion that the Receiver must follow the administrative
claims process is consistent with the courts analysis in Brady. The Receiver is asserting a defense
by refusing to return the entire $100,000.00 to the Liquidating Agent that triggers the requirement
that the Receiver exhaust administrative remedies. To maintain such defense, asserted in an action
that was pending prior to the appointment of the Liquidating Agent, the Receiver must exhaust
administrative remedies, lest this Court is without jurisdiction, pursuant to 12 U.S.C.
1787(b)(13)(D), to make a determination on the Receivers defense.

15

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Based on the foregoing, the Receiver must either return the entire $100,000.00 to the
Liquidating Agent, or comply with the requirements of the administrative claims process in
accordance with the requirements of the FCUA.
IV.

CONCLUSION
Struna fraudulently transferred $100,000.00 to AB&C.

Pursuant to 12 U.S.C.

1787(b)(16), the Liquidating Agent avoided the fraudulent transfer and is entitled recover the full
$100,000.00. By refusing to do so, the Receiver is seeking to restrain and affect the Liquidating
Agents exercise of its powers in conflict with 12 U.S.C. 1787(g).
Additionally, the Receiver, in denying the Liquidating Agents request for return of the
$100,000.00, is seeking, and in fact making, a determination of rights with respect to assets of the
Liquidating Agent. The FCUA, and more specifically, 12 U.S.C. 1787(b)(13)(D), explicitly
limits a courts jurisdiction over actions seeking determinations with respect to assets of the
Liquidating Agent.
Based on the foregoing, the Liquidating Agent is entitled to the full amount of its
$100,000.00 Claim.
Respectfully submitted, this the 10th day of March, 2016.
/s/ Samuel D. Fleder
Samuel D. Fleder, Federal I.D. No. 10994
SMITH DEBNAM NARRON
DRAKE SAINTSING & MYERS, LLP
PO Box 26268
Raleigh NC 27611
Telephone: (919) 250-2000
Facsimile: (919) 250-2211
Email: sfleder@smithdebnamlaw.com
Local Counsel for National Credit Union
Administration Board, acting in its capacity as
Liquidating Agent for Taupa Lithuanian Credit
Union, Inc.
Samuel J. Lauricia III (0078158)
Matthew C. Miller (0084977)
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WESTON HURD LLP


The Tower at Erieview
1301 E. 9th Street, Suite 1900
Cleveland, Ohio 44114
Phone: 216-241-6602; Fax: 216-641-8369
E-mail: SLauricia@westonhurd.com
MMiller@westonhurd.com
Counsel for National Credit Union Administration
Board, acting in its capacity as Liquidating Agent
for Taupa Lithuanian Credit Union, Inc.

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IN THE UNITED STATES DISTRICT COURT


DISTRICT OF SOUTH CAROLINA
ANDERSON/GREENWOOD DIVISION
IN RE:
RECEIVER FOR BONNIE GENE
WILSON AND ATLANTIC BULLION
& COIN, INC.

)
)
)
)
)

CIVIL ACTION NO. 8:12-cv-02078JMC

CERTIFICATE OF SERVICE
I, Samuel J. Lauricia III, of Weston Hurd LLP, state under penalty of perjury:
That I am, and at all times hereinafter-mentioned was, more than eighteen (18) years of
age; and
That on this date, I served copies of the foregoing MEMORANDUM IN SUPPORT OF
MOTION IN SUPPORT OF UNRESOLVED OBJECTIONS BY THE NATIONAL CREDIT
UNION ADMINISTRATION BOARD ACTING IN ITS CAPACITY AS LIQUIDATING
AGENT FOR TAUPA LITHUANIAN CREDIT UNION, INC. by service through the CM/ECF
system which will send notification of such filing to the following and/or via first class mail
through the U.S. Postal Service at the following addresses:
VIA CM/ECF
William J. Watkins, Jr., Esq.
U.S. Attorneys Office (Greenville)
Martin Kyle Thompson, Esq.
Clawson and Staubes (Greenville)
Beattie B. Ashmore, Esq.
Beattie B. Ashmore Law Office
Lauren S. Price, Esq.
Tollison Law Firm
Lewis Walter Tollison, III, Esq.
Tollison Law Firm

VIA FIRST CLASS MAIL


Gordon L. Hall
c/o Brighton-Nicole Jorgensen
3546 East Presidio Circle
Mesa, AZ 85213
Benton Tyler Thomas Hall
c/o Brighton-Nicole Jorgensen
3546 East Presidio Circle
Mesa, AZ 85213
Small Farmers Journal, Inc.
P.O. Box 1627
Sister, OR 97759
Diana Vossbrinck
503 Taylor Street
Anderson, SC 29625

Kimberly T. Thomason, Esq.


Truluck Thomason
James W. Bannister, Esq.
Bannister and Wyatt
Edward B. Davis, Esq.
Bell Davis and Pitt
18

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Page 19 of 19

This the 10th day of March, 2016.


/s/ Samuel D. Fleder
Samuel D. Fleder, Federal I.D. No. 10994
SMITH DEBNAM NARRON
DRAKE SAINTSING & MYERS, LLP
PO Box 26268
Raleigh NC 27611
Telephone: (919) 250-2000
Facsimile: (919) 250-2211
Email: sfleder@smithdebnamlaw.com
Local Counsel for National Credit Union
Administration Board, acting in its capacity as
Liquidating Agent for Taupa Lithuanian Credit
Union, Inc.

19

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Page 1 of 11

IN THE UNITED STATES DISTRICT COURT


FOR THE DISTRICT OF SOUTH CAROLINA
ANDERSON/GREENWOOD DIVISION
Civil Action No. 8:12-cv-2078-JMC
IN RE: RECEIVER FOR RONNIE GENE
WILSON AND ATLANTIC BULLION &
COIN, INC.

RECEIVERS BRIEF IN OPPOSITION


TO NCUAS MOTION IN SUPPORT
OF UNRESOLVED OBJECTIONS

Counsel for the Receiver, Beattie B. Ashmore, respectfully submits its Brief in
Opposition to the National Credit Union Administration Boards (the NCUA) Motion in
Support of Unresolved Objections. [ECF No. 183.] The Receiver requests this Court deny
NCUAs motion and overrule its objections on the grounds that: (1) equity dictates that the
NCUA is not entitled to recover the entire $100,000; (2) the NCUA is not entitled to avoid
the transfers John Struna (Struna) made to Atlantic Bullion & Coin, Inc. (AB&C); (3)
the Receiver does not have to submit to the NCUAs administrative claims process; and (4)
the NCUAs rights are not superior to the Receivers rights.
I.

FACTUAL BACKGROUND
On July 30, 2012, Ronnie Gene Wilson (Wilson) and AB&C pled guilty to two

counts of mail fraud stemming from their involvement in a criminal Ponzi scheme
involving hundreds of victims and millions of dollars. See United States v. Ronnie Gene
Wilson, et al, 8:12-cr-320-JMC. As part of the fraudulent investment scheme, Wilson,
through his company AB&C and other agents, recruited individuals to purportedly invest
in the purchase and sale of silver holdings. Investors were promised high rates of returns
on their investment and subjected to highly unorthodox investment practices. Some

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investors received substantial returns and profits through payments of ill-gotten gains from
AB&C while other investors lost large sums of money.
Pursuant to the Court Order and related to the above noted criminal matter, the
Receiver was tasked with assuming management and control over all the financial and
business affairs for a number of individuals and companies (collectively AB&C
Receivership Entities). The Court Order requires the Receiver, among other things, to
locate and manage assets previously acquired by and/or in the name/possession of the
AB&C Receivership Entities. In addition, the Receiver was ordered to develop and
distribute a Proof of Claim form and submit a Plan for Claims Administration and
Distribution of Proceeds to the Court for approval.
II.

BRIEF PROCEDURAL BACKGROUND


On October 10, 2014, the Northern District of Ohio, in case number 1:14-cv-02199,

styled NCUA v. John Struna, et al., the court granted the NCUA attachment of a claim that
Struna could file with the Receiver for AB&C.

(Agreed Order Granting Plaintiffs

Combined (1) Motion for Prejudgment Attachment; and (2) Motion for Preliminary
Injunction, NCUA v. John Struna, et al., Case No. 1:14-cv-02199 (N.D. Ohio Oct. 10,
2014), ECF No. 15. (the Ohio Order, attached hereto as Exhibit A.)) On October 15,
2014, the NCUA, acting in its capacity as liquidating agent for Taupa Lithuanian Credit
Union (Taupa), filed a claim with the Receiver demanding return of the entire $100,000
Struna invested with AB&C. On December 10, 2014, the NCUA supplemented its claim.
[Supplement to NCUA Claim (the Supplement), attached hereto as Exhibit B.] On
February 3, 2016, the NCUA submitted an Objection to Claim Form, accompanied by a
letter explaining its objection. [Letter from NCUA dated February 3, 2016 (the Letter),

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attached hereto as Exhibit C.] On March 10, 2016, the NCUA filed the instant motion,
together with a memorandum in support of its motion. [ECF Nos.183 and 183-1.]
III.

DISCUSSION
A. Equity Dictates that the NCUA is not Entitled to Recover the entire
$100,000
In receivership proceedings, the district court sits in equity. S.E.C. v. Byers, 637 F.

Supp. 2d 166, 168 (S.D.N.Y. 2009) affd sub nom. S.E.C. v. Malek, 397 F. Appx 711 (2d
Cir. 2010) and affd sub nom. S.E.C. v. Orgel, 407 F. Appx 504 (2d Cir. 2010); Kathy
Bazoian Phelps, Handling Claims in Ponzi Scheme Bankruptcy and Receivership Cases, 42
GOLDEN

GATE

U.

L.

REV.

572

(2012),

available

at

http://digitalcommons.law.ggu.edu/ggulrev/vol42/iss4/6.
The fact that the investors might be entitled under other law to recover their assets
does not end the inquiry in this equity receivership because equitable concerns may
supersede those other rights. Byers, 637 F. Supp. 2d at 183. This Court has the authority
to consider the culpability of any person seeking to recover under the plan of distribution.
Id.; S.E.C. v. Credit Bancorp, Ltd., No. 99 CIV. 11395 RWS, 2000 WL 1752979, at *35
n.48 (S.D.N.Y. Nov. 29, 2000) aff'd, 290 F.3d 80 (2d Cir. 2002) (noting that unclean
hands of parties would be a relevant consideration in equity).
The NCUA succeeds to all rights, titles, powers, and privileges of the credit
union, and of any member, accountholder, officer, or director of such credit union with
respect to the credit union and the assets of the credit union. 12 U.S.C 1787(b)(2)(A)(i).
It follows that the NCUA would also succeed to any bad acts or fraud committed by the
credit union, its officers, directors, employees, or agents.

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Consequently, the NCUA does not come into this Court with clean hands. Upon
further investigation into Struna, the Receiver discovered that Struna conspired with
Taupas former CEO, Alex Spirikaitis (Spirikaitis), to cause approximately 46 fraudulent
transfers into Strunas accounts. (Criminal Complaint, United States v. Spirikaitis, Case
No. 1:14-cr-00025-JG (N.D. Ohio July 16, 2013), ECF No. 1, attached hereto as Exhibit
D). Spirikaitis, similar to Struna, pleaded guilty to conspiracy to commit bank fraud, and
was sentenced back in 2014. (Judgment in a Criminal Case, United States v. Spirikaitis,
Case No. 1:14-cr-00025-JG (N.D. Ohio December 1, 2014), ECF No. 38, attached hereto
as Exhibit E).
The unclean hands of Taupa is a vital consideration in this Court of equity. If the
NCUA were to walk away with the entire $100,000, it would be unjustly enriched despite
Taupas central role, via Spirikaitis, in Strunas fraud. Based on the forgoing, the Receiver
requests that this Court allow the NCUA to only receive distributions on par with the
defrauded investors and not be given any priority or special consideration.
B. The NCUA is not Entitled to Avoid the Transfers Struna Made to AB&C
As previously outlined, Taupas own CEO played a central (and fraudulent) role in
Strunas scheme. The NCUA argues that it has the right to avoid a transfer to any person
who the NCUA determines is a debtor of the credit union, if such party or person
voluntarily or involuntarily made such transfer or incurred such liability with the intent to
hinder, delay, or defraud the insured credit union or the Board. 12 U.S.C. 1787(b)(16).
Strunas intent to defraud, hinder or delay, is negated by the fact that Taupas own CEO
controlled the fraud, helped Struna commit the fraud, and facilitated the multiple transfers,
totaling $100,000, to AB&C.

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The NCUA cannot now come into this Court of equity, stand behind the shield of
Section 1787 of Title 12, and expect that any supposed fraudulent transfer would not be
offset by Taupas own fraud, hindrance, or delay.
C. The Receiver Does Not have to Submit to the NCUAs Administrative
Claims Process
i. NCUAs Reliance on 1787(g)
The NCUA relies on Section 1787(g) of Title 12 to maintain that this Court does
not have jurisdiction over the claim it submitted to the Receiver. Section 1787(g) states
[e]xcept as provided in this section, no court may take any action, except at the request of
the Board of Directors by regulation or order, to restrain or affect the exercise of powers or
functions of the Board as a conservator or a liquidating agent. 12 U.S.C. 1787(g).1
In effect, the NCUA has requested this Court take action, by submitting a claim to
the Receiver and by filing this instant motion. Back in 2014, the NCUA was directed by
the Ohio Order to file a claim with the Receiver, after it requested such an order from the
Ohio court. (Ex. A, at p. 2.) The Northern District of Ohio, and not this Court, affected
the exercise of the NCUAs powers by agreeing with the NCUAs request, and directing
the NCUA to submit to the Receivers claims process. Specifically, the Ohio Order
explains
the Motion requests an order attaching a claim that Defendant John Struna
could otherwise file with Beattie B. Ashmore, Receiver, appointed in case
no. 12-cv-2078-JMC in the United States District Court, District of South
Carolina. Specifically, the Liquidating Agent requests authority to file a
claim against Ronnie Gene Wilson, owner of Atlantic Bullion & Coin,
Inc. for $100,000.00.
(See id.) (emphasis added).
1

The NCUAs power under Section 1787(g) is not absolute and courts agree. See Bumpus v. Natl
Credit Union Admin., No. CIV. A. 91-11096-Z, 1992 WL 97984, at *4 (D. Mass. Apr. 29, 1992) (finding that
when the NCUA arrogates a power not granted it by Congress, courts may intervene notwithstanding
1787(g)).

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The NCUA does not have the right to force the Receiver to submit to the NCUAs
administrative claims process after it specifically requested the Ohio court allow it to file a
claim against the Receiver. The NCUAs request upon the Ohio court, and the request
upon this Court are contradictory. The Ohio Order concerned only filing a claim with the
Receiver, and does not contemplate any claim that the Receiver may file with the NCUA.
Nevertheless, it is hard to comprehend that the Receiver would ever file a claim with the
NCUA considering it is the NCUA attempting to recover monies from the Receiver.
The NCUA should not be allowed to come into this Court, make a claim to funds,
and then in the eleventh hour insist upon the Receiver and this Court to now follow
NCUAs administrative claim procedures. This is nonsensical, especially after a federal
judge, at the request of the NCUA, directed the NCUA to submit to the Receivers claims
process, and after 17 months have passed since the NCUA first submitted its claim against
the Receiver.
ii. NCUAs Reliance on 12 C.F.R. Part 709 and the Notice Provisions
Within 12 U.S.C. Section 1787(b)
The NCUA insists that the Receiver must submit to its claims process and exhaust
administrative remedies under that process. In support of this contention, the NCUA cites
to Title 12, Part 709 of the Code of Federal Regulations to explain the mandatory claims
process for creditors. Part 709 is aptly titled Involuntary Liquidation of Federal Credit
Union and Adjudication of Creditor Claims Involving Federally Insured Credit Unions in
Liquidation. 12 C.F.R. 709 (emphasis added). The scope of the regulation explains that
it involves adjudication of creditor claims in all cases involving federally-insured credit
unions. 12 C.F.R. 709.0 (emphasis added). The definitions section affirms that a
Claim means a creditors claim against the credit union in liquidation. 12 C.F.R.
6

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709.1(d) (emphasis added). Title 12, Part 709 complements the notice provisions within 12
U.S.C. Section 1787(b).
However, the NCUAs reliance on 12 C.F.R. Part 709 is misplaced because the
Receiver is not a creditor of Taupa despite the NCUA maintaining [t]he Receiver must
file a creditors claim. [ECF No. 183-1, at p. 14]. A creditor is a person to whom a
debt is owing by another person, called the debtor. BLACKS LAW DICTIONARY (9th ed.
2009), available at Westlaw BLACKS.
This analysis is harmonious with Acciard v. Whitney, No. 2:07-CV-00476-FTM-36,
2011 WL 4552564, at *4 (M.D. Fla. Sept. 30, 2011). In Acciard, the court explained
[t]he implementing regulations of 1787 provide little guidance in defining
a claim as a creditors claim against the credit union in liquidation. 12
C.F.R. 709.1(d); see also 12 C.F.R. 709. Additionally, the Financial
Institutions Reform, Recovery, and Enforcement Act (FIRREA) does not
define the terms claim or creditor either.
Turning to the Bankruptcy Code for definitional guidance, the Acciard court concluded
that claim or creditors claim is essentially an action asserting a right to payment. In
defending the instant motion, and defending against the NCUAs claim for the entire
$100,000, the Receiver is not asserting a right to payment, but merely asserting objections
to the NCUAs assertion to a right of payment.
Notably, in footnote five of its brief, the NCUA declares [t]he Receiver is a debtor
of the Liquidating Agent [ECF No. 183-1, at p. 13] (emphasis added). If the NCUA
believes that the Receiver is a debtor, then it is peculiar for the NCUA to insist that the
Receiver follow the creditors claim process when it is wholly inapplicable. The NCUA
should not be allowed to mold the applicable statutes to fit its needs by using the words
debtor and creditor interchangeably.

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Despite the foregoing, this Court does not need to reach the issue of whether the
Receiver is a creditor, a debtor, or anything else for two reasons: (1) the NCUA was
directed by the Northern District of Ohio to submit to the Receivers claims process, as
outlined in Part III.C(i), supra, of this Brief; and (2) the NCUA did not abide by its own
administrative claims process. The NCUAs administrative claims process outlines that
any party wishing to submit a claim against the liquidated credit union must submit
written proof of claim in accordance with the requirements set forth in the notice to
creditors. 12 U.S.C. Section 1787(b)(13)(D). The NCUA never provided appropriate
notice to the Receiver in accordance with notice provisions in 12 C.F.R. 709, 12 U.S.C.
Section 1787(b)(13)(D).2 To this effect, the Receiver has not been given a full and fair
opportunity, under the NCUAs administrative process, to object to the claims.3
iii. NCUAs Reliance on 12 U.S.C. Section 1787(b)(13)(D)
In the alternative, the NCUA attempts to force the Receiver to comply with the
NCUAs administrative claims process because of the phrase in 12 U.S.C. Section
1787(b)(13)(D) no court shall have jurisdiction over any action seeking a
2

If the Receiver were forced to comply with the NCUAs administrative claims process, then it is
likely that the NCUA would deny as untimely the claim of the Receiver, who nevervia formal mailed
notice or otherwisewas given constitutionally sufficient notice of the requirement to file a claim against the
NCUA before the bar date. Such a denial deprives the Receiver of its claim without ever affording it notice
of the deprivation or an opportunity to defend against it. Such a deprivation without appropriate notice
violates due process. See Elmco Properties, Inc. v. Second Nat. Fed. Sav. Assn, 94 F.3d 914, 920 (4th Cir.
1996) (discussing untimely claims against the Resolution Trust Corporation acting as receiver of a failed
federal savings association).
Nothing in the record suggests that the Receiver had actual knowledge of the NCUAs
administrative claims process or bar date, the Receiver was never placed on inquiry notice of the claims
process since the NCUA submitted to the Receivers claims process.
Congress has established FIRREAs administrative claims process as the sole door through which a
claimant against a failed bank may enter. The NCUA may not constitutionally close that door and shut off the
exclusive opportunities for review to which it leads without giving the claimant appropriate notice of its
closing. See Elmco Properties, 94 F.3d at 922.
3
Under this receivership proceeding, the Receiver has the opportunity to respond and object to the
NCUAs claim. The NCUA attempts to undermine judicial economy by forcing the Receiver to comply with
the NCUAs administrative claims process, thereby delaying resolution of the claim and causing more
money, time and resources to be spent defending the Receivers objections that are rightfully brought under
this receivership proceeding.

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determination of rights with respect to, the assets of any credit union for which the Board
has been appointed liquidating agent.
First, as discussed supra, the NCUA was ordered to submit to the Receivers claims
process. Second, the NCUA has submitted to and participated in the Receivers claims
process for the past 17 months. Finally, it is the Ohio court that had jurisdiction over the
NCUAs action seeking a determination of rights with respect to the AB&C claim. As
such, the Ohio court held that the NCUA had a right to submit a claim to the Receiver for
$100,000. This Court is not determining if such right exists, the Ohio court has already
made that determination. In accordance with the receivership process and the Ohio Order,
this Court is only deciding how much money the NCUA may be entitled to receive and,
therefore, is not in contravention of 12 U.S.C. Section 1787(b)(13)(D).4
D. The NCUAs Rights are Not Superior to the Receivers Rights
The NCUAs interpretation and arguments of 12 U.S.C. Section 1787(b)(16)(c) are
not infallible. The NCUA admits that the statute only contemplates bankruptcy
proceedings by providing that [t]he rights of the Board under this paragraph shall superior
to any rights of a trustee or any other party (other than any party which is a Federal
Agency) under Title 11. 12 12 U.S.C. Section 1787(b)(16)(c); [ECF No. 183-1 at p. 8].
However, it contends that the same principal underlying the statutes intent appliesthat
the NCUAs claim is superior to that of the Receiver and any other investor.
We are not in a proceeding under Title 11, therefore, on its face, the superiority
clause does not apply to the present situation. Further, in interpreting the plain language of
a statute, a court give[s] the words of a statute their ordinary, contemporary, common
4

In fact, the Ohio court recognized that the NCUA might not recover any money from the Receiver.
In the Ohio Order, the court stated [i]n the event the AB&C Claim is paid, any such proceeds would be
placed under the control of this Honorable Court and a Trustee appointed to hold such asset until the claims
in this case have been resolved. (Ex. A, at p. 2.) (emphasis added).

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meaning, absent an indication Congress intended them to bear some different import.
Williams v. Taylor, 529 U.S. 420, 431 (2000). If Congress intended the superiority of the
NCUA claim to apply outside the context of a bankruptcy proceeding, it had the ability and
the know-how to do so. The NCUA should not write in favorable words or glean favorable
intent from Congresswhen on its face, Congress only meant for this superiority statute to
apply in the bankruptcy context.
Additionally, in the Letter,5 the NCUA maintains that it is entitled to priority over
the defrauded investors because it is a creditor of the Receiver.

In receivership

proceedings, courts have the authority to approve any [distribution] plan provided it is
fair and reasonable. Byers, 637 F. Supp. 2d at 17475. One scholar explained
[a] receivers distribution plan may, therefore, distinguish between different
types of claimants and provide for different treatment for different classes
of investors. For example, a distribution plan may seek to limit distributions
to those claimants who suffered actual out-of-pocket losses. Or, differing
treatment may be sought for distributions to investors in contrast to trade
creditors.
Phelps, supra, at 572. Our sister court agreed with this reasoning and approved a higher
priority for defrauded investors over non-investor general creditors. U.S. Commodity
Futures Trading Commn v. Capitalstreet Fin., LLC, No. 3:09cv387-RJC-DCK, 2010 WL
2572349, at *2 (W.D.N.C. June 18, 2010). In the Plan in this case, creditors and investors
are given equal priority. [Plan, ECF No. 176.]
Accordingly, the Receiver requests that the NCUA simply receive distributions on
par with the defrauded investors and not be given priority.

The NCUAs position is a moving target. Initially, in the Supplement from 2014, the NCUA
argued that it has a right to avoid the transfer under 12 U.S.C. Section 1787(b)(16). In the February 2016
letter, it argued that it was a creditor of the Receiver and entitled to a higher priority over the defrauded
investors. Now, in the instant motion, the NCUA argues, amongst other things, that the Receiver must submit
to the NCUAs administrative claims process.

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8:12-cv-02078-JMC

IV.

Date Filed 03/28/16

Entry Number 195

Page 11 of 11

CONCLUSION
Based on the foregoing arguments, the Receiver respectfully requests the this Court

deny the NCUAs motion, overrule any of NCUAs objections, and find that NCUA is
only entitled to receive distributions on par with the defrauded investors.

Respectfully submitted,
THE TOLLISON LAW FIRM, P.A.
/s/L. Walter Tollison, III
L. Walter Tollison, III
Federal Bar No. 4117
Walt.tollison@thetollisonlawfirm.com
24 Vardry Street, Suite 203
Greenville, South Carolina 29601
Phone: (864) 451-7038
Fax: (864) 451-7591
Attorney for the Receiver
March 28, 2016
Greenville, South Carolina

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