C. Randel Lewis, solely in his capacity as Receiver, Plaintiff-Appellee and Cross-Appellant,
Steve Taylor, Defendant-Appellant and Cross-Appellee.
and County of Denver District Court No. 12CV1699 Honorable
Edward D. Bronfin, Judge
REVERSED, ORDER VACATED, AND CASE REMANDED WITH DIRECTIONS.
Lindquist & Vennum PLLP, Michael T. Gilbert, John C.
Smiley, Theodore J. Hartl, Denver, Colorado, for
Plaintiff-Appellee and Cross-Appellant.
& Podoll, P.C., Richard B. Podoll, Robert A. Kitsmiller,
Dustin J. Priebe, Greenwood Village, Colorado, for
Defendant-Appellant and Cross-Appellee.
1 Following remand instructions from the supreme court, we
are again presented with an issue of first impression in
Colorado. We must now decide whether the Colorado Uniform
Fraudulent Transfer Act (CUFTA) requires an innocent investor
who profited from his investment in a Ponzi scheme to return
all funds in excess of his principal investment. We conclude
that such an innocent investor may be entitled to keep some
of the funds exceeding the amount of his principal.
2 In 2006, defendant, Steve Taylor, invested three million
dollars in a hedge fund run by Sean Mueller, a licensed
securities broker. During the period of his investment,
Taylor received a series of payments from the fund. Taylor
withdrew all of his money in 2007, about one year after
investing, and made a profit of over $487, 000.
3 In 2010, the Colorado Securities Commissioner discovered
that the hedge fund was a Ponzi scheme and Mueller was
convicted of various criminal offenses. The district court
appointed plaintiff, C. Randel Lewis, as receiver to collect
and distribute Mueller's assets to the creditors and
investors he defrauded through the Ponzi
scheme. Lewis filed a claim under CUFTA seeking to
void the transfer of the over $487, 000 in net profits that
Taylor received from Mueller's fund.
4 Both Lewis and Taylor moved the district court for summary
judgment. Taylor argued that (1) the CUFTA claim was filed
outside the statutory time period and (2) even if the claim
was timely, his net profits were not recoverable under CUFTA
because he was an innocent investor. Lewis argued that the
claim was timely filed and that CUFTA required Taylor to
return his net profits. The district court agreed with Lewis
on both issues and granted him summary judgment.
5 Taylor appealed. A division of this court held that the
district court erred by ruling that the claim was timely and
reversed the district court's grant of summary judgment
on that ground. Lewis v. Taylor, 2014 COA 27M,
¶ 8. Based on this conclusion, the division did not
address whether CUFTA required Taylor to return his net
6 Lewis appealed the division's decision to our supreme
court. The supreme court reversed the division's opinion,
reinstated the district court's ruling that the CUFTA
claim was timely, and remanded the case to this court to
"consider the alternate argument on which [Taylor]
appealed the trial court's order." Lewis v.
Taylor, 2016 CO 48, ¶ 39. We therefore now address
whether CUFTA requires Taylor to relinquish any amount of
money exceeding his principal investment in the Ponzi scheme.
CUFTA and Ponzi Schemes
7 Taylor argues that the district court erred by ruling that
even though he was an innocent investor in Mueller's
fund, CUFTA nevertheless required him to return all of the
payments from the fund in excess of his principal investment.
We review an order granting summary judgment de novo,
applying the same legal principles as the district court.
See Hamon Contractors, Inc. v. Carter & Burgess,
Inc., 229 P.3d 282, 290 (Colo.App. 2009).
8 Granting summary judgment is proper "when the
pleadings and supporting documentation demonstrate that no
genuine issue of material fact exists and that the moving
party is entitled to judgment as a matter of law."
Credit Serv. Co., Inc. v. Dauwe, 134 P.3d 444, 445
(Colo.App. 2005). We, like the district court, give the
nonmoving party the benefit of all favorable inferences from
the undisputed facts. Id.
9 The CUFTA provision under which Lewis brought his claim,
section 38-8-105(1)(a), C.R.S. 2016, provides that "[a]
transfer made . . . by a debtor is fraudulent as to a
creditor . . . if the debtor made the transfer . . . . [w]ith
actual intent to hinder, delay, or defraud any creditor of
the debtor." The parties do not dispute that (1)
Mueller's fund was Taylor's debtor based on
Taylor's three million dollar ...