ORDER ADOPTING REPORT AND RECOMMENDATION

ELIZABETH A. KOVACHEVICH, District Judge.

This cause is before the Court on the report and recommendation (R & R) issued by Magistrate Judge Mark A. Pizzo on November 29, 2012 (Doc. 121). The magistrate judge recommended that: 1) the Receiver's motion for summary judgment (Doc. 97) be granted and that the Clerk be directed to enter judgment for the Receiver and against Dancing $ in the amount of $107,172.11; 2) the Receiver's renewed motion for partial summary judgment (Doc. 72) be found to be moot; 3) the Receiver's motion to strike report of Defendants' designated expert, Harold McFarland, and to Preclude His Testimony at Trial (Doc. 102) be denied; 4) all pending motions be denied; and 5) the Clerk be directed to close the case. The R & R also recommended that the Receiver's request for prejudgment interest be denied.

Pursuant to Rule 6.02, Rules of the United States District Court for the Middle District of Florida, the parties had fourteen (14) days after service to file written objections to the proposed findings and recommendations, or be barred from attacking the factual findings on appeal. Objections and responses to objections to the report and recommendation were filed (Docs. 123, 124, 126 and 127).

STANDARD OF REVIEW

Under the Federal Magistrate's Act (the "Act"), Congress vested Article III judges with the power to authorize a United States Magistrate Judge to conduct evidentiary hearings. 28 U.S.C. § 636. A District Court Judge may designate a United States Magistrate Judge to conduct hearings, including evidentiary hearings, in order to submit proposed findings of fact and recommendations (i.e. R & R) for the disposition of motions for injunctive relief. 28 U.S.C. § 636(b)(1)(B). Section 636(b)(1) also states that a judge of the court shall make a de novo determination of those portions of the R & R to which objection is made. 28 U.S.C. § 636(b)(1).

When a party makes a timely and specific objection to a finding of fact in the report and recommendation, the district court should make a de novo review of the record with respect to that factual issue. 28 U.S.C. § 636(b)(1); U.S. v. Raddatz, 447 U.S. 667, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980); Jeffrey S. v. State Board of Education of State of Georgia, 896 F.2d 507 (11th Cir.1990). However, when no timely and specific objections are filed, case law indicates that the court should review the findings using a clearly erroneous standard. Gropp v. United Airlines, Inc., 817 F.Supp. 1558, 1562 (M.D.Fla. 1993).

DISCUSSION

A. Background

The Magistrate Judge filed an excellent Report and Recommendation, which this Court incorporates by reference. Therein he outlined the basics of this cause. He stated:

Further, the R & R concisely set out the question before the Court: "... the case-specific questions should be: Did Nadel operate the hedge funds as ponzi scheme when he made the distributions to Dancing $, and if so, is the evidence so one-sided that the Receiver is entitled to summary judgment on this issue as a matter of law?" (R & R pg. 1302).

The R & R sets out the following information as to the position of this defendant, Dancing $, in the activity of Mr. Nadel:

The Receiver seeks judgment from this Court in the amount of $107,172.11, the amount of the "false profits," and the Magistrate Judge recommends that the Court grant the request. The Magistrate Judge succinctly says:

B. Objections

The Receiver filed objections to the R & R (Doc. 124) only as to the recommendation of the Magistrate Judge that the request for prejudgment interest be denied. The Receiver makes arguments not raised before the Magistrate Judge but the Court is not persuaded by those arguments. The Court agrees with the R & R that:

The Court find that the equities support the denial of the request for prejudgment interest.

The Defendant filed objections to the report and recommendation (Doc. 123) and the Receiver responded thereto (Doc. 126). The Defendant seeks denial of the motion for summary judgment and reargues several issues that have been ruled on previously in this case, including the question of the standing of the Receiver to bring the action under the Florida Uniform Fraudulent Transfers Act (FUFTA), Section 726.101, et seq, Fla. Stat. and the question of whether there is a factual issue that the transfer of money to the defendant through two other entities created standing. The remaining objections are to the finding as to the "alter ego" analysis of the R & R, whether or not the Valhalla and Scoop Real Estate entities were operated as a ponzi scheme at the time of the transfers to the defendant, whether the defendant is entitled to a set-off, and whether the Magistrate Judge improperly weighed the evidence. The Court finds the excellent analysis of the Report and Recommendation and the arguments of the Receiver persuasive on all of the issues raised in the objections of the defendant and incorporates them by reference herein.

The Court finds this case, along with the other Wiand cases, to be unfortunate all the way around. The people involved with Mr. Nadel and his schemes were many. Ms Yip opined that:

These people were injured and may never be made whole. The role of the Receiver in this case, and similar cases, is to "to bring suits ... against ponzi scheme investors to the extent that investors have received payments in excess of the amounts invested and those payments are avoidable as fraudulent transfers. Donell v. Kowell, 533 F.3d 762, 770 (9th Cir.2008) (`the policy justification is ratable distribution of remaining assets among all defrauded investors'). Hence, the innocent `winners' in a ponzi scheme should not be permitted to `enjoy an advantage over later investors sucked into the ponzi scheme who were not so lucky.' Id. citing In re United Energy Corp., 944 F.2d 589, 596 (9th Cir.1991)." (R & R pgs. 1305-06).

The Court has reviewed the report and recommendation and made an independent review of the record. Upon due consideration, the Court concurs with the report and recommendation. Accordingly, it is

ORDERED that the report and recommendation, November 29, 2012 (Doc. 121) be adopted and incorporated by reference; the objection of both parties (Docs. 123 and 124) be overruled; the Receiver's motion for summary judgment (Doc. 97) be granted; the Clerk is directed to enter judgment for the Receiver and against Dancing $ in the amount of $107,172.11; the Receiver's renewed motion for partial summary judgment (Doc. 72) be found to be moot; the Receiver's motion to strike report of Defendants' designated expert, Harold McFarland, and to Preclude His Testimony at Trial (Doc. 102) be denied; and the Receiver's request for prejudgment interest be denied. The Clerk of Court is directed to close this case and to terminate any other pending motions.

REPORT AND RECOMMENDATION

MARK A. PIZZO, United States Magistrate Judge.

This is one of many cases in this division emanating from a Securities Exchange Commission enforcement action aimed at dealing with the aftermath of a massive ponzi scheme perpetrated by Arthur Nadel, a hedge fund manager. See SEC v. Arthur Nadel, et al., Case No. 8:09-cv-87-T-26TBM. After the SEC's action and the appointment of Burton Wiand as the Receiver, Nadel pled guilty in the Southern District of New York to a fifteen count indictment charging him with securities fraud, mail fraud, and wire fraud surrounding the events precipitating the enforcement action. The Receiver has sued numerous hedge fund investors, including Dancing $ LLC ("Dancing $"), seeking to claw back "false profits" under two theories grounded on the same illegal scheme the indictment tracks: avoidance of fraudulent transfers under Florida's Uniform Fraudulent Transfer Act, Fla. Stat. §§ 726.101, et seq. ("FUFTA"), and unjust enrichment.1 Currently, the Receiver moves for summary judgment on a precise but critical issue to the determination of this action — Nadel operated the hedge funds as a ponzi scheme during the distributions of "false profits" to Dancing $ (see docs. 72, 97). After considering Dancing $'s responses (docs. 95, 114) and the summary judgment record, I find that no material dispute of facts exists and recommend the Receiver's motion for summary judgment be granted.2

A. Standard of review

Motions for summary judgment should only be granted when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A court, however, may only consider "that evidence which can be reduced to an admissible form," Rowell v. BellSouth Corp., 433 F.3d 794, 799 (11th Cir.2005). The existence of some factual disputes between the litigants will not defeat an otherwise properly supported summary judgment motion; "the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original). The substantive law applicable to the claimed causes of action will identify which facts are material. Id. In considering the evidence, the court resolves all reasonable doubts about the facts in favor of the non-moving party and draws all justifiable inferences in its favor. Hickson Corp. v. Northern Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir.2004). The court does not, however, weigh the evidence or make findings of fact. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505.

B. Background

This case is one of numerous clawback actions the Receiver has filed in this division. With a few exceptions, all the complaints are alike in their recitals about Nadel, his conduct, and the Receiver's causes of action against a defendant. Any differences are due to the peculiarities of the defendant and the dates and the amounts of the specific distributions made to a defendant. Here, for example, the Receiver alleges Dancing $, a Montana LLC comprised of 136 members, received distributions from January 2008 through April 2008 totaling $107,172.11 in false profits (doc. 1, ex. A; doc. 115 (Waldman Decl. It 2)). In a number of cases, including this one, the Receiver has moved for summary judgment on a discreet factual determination that goes to the heart of his FUFTA claims — that Nadel operated the hedge funds as a ponzi scheme from their inception. Frankly, the Receiver frames the factual issue more broadly than required. Instead, the case-specific questions should be: Did Nadel operate the hedge funds as ponzi scheme when he made the distributions to Dancing $, and if so, is the evidence so one-sided that the Receiver is entitled to summary judgment on this issue as a matter of law? Before answering those questions, however, it is helpful to understand the events leading up to the Receiver's current partial summary judgment motion and FUFTA's application to a clawback case like this one.

1. the events leading up to the current motion

Because these clawback cases presented overlapping legal arguments and a core of common, relevant facts, the Receiver initially filed an omnibus motion for partial summary judgment directed to a number cases, including Dancing $ (see doc. 30, ex. A).3 In that motion, the Receiver argued for the same factual determination he seeks in his current motion before the Court (i.e. Nadel operated the hedge funds as a ponzi scheme from the earliest hedge fund's inception (1999)). But the prior motion differs significantly from the latter one as both sides have added to the summary judgment record and a new development occurred — Nadel's death. See Supplement to Receiver's Renewed Motion for Partial Summary Judgment, doc. 75.

a. the Receiver's first partial summary judgment attempt

In the first motion, the Receiver proffered certain items: Nadel's indictment, Nadel's plea transcript and plea agreement letter, the government's sentencing memorandum, the criminal judgment, and some of Nadel's letters and personal memos. Armed with this record, the Receiver argued that the clawback defendants, including Dancing $, should be "precluded from litigating facts necessarily established" by Nadel's guilty plea in the Souther District of New York (see doc. 30 at 10). Such a finding would have created the irrefutable presumption of an actual intent to defraud creditors beginning in 1999, the start date of the ponzi scheme. I interpreted the Receiver's argument to be a form of offensive collateral estoppel or some stand-alone doctrine of preclusion (e.g., doc. 30, at 10 n. 3). Many defendants, including Dancing $, objected to this novel theory along two themes: offensive collateral estoppel did not apply to them and they needed to conduct additional discovery. After considering the Receiver's omnibus motion and the numerous responses made by the clawback defendants, I concluded offensive collateral estoppel did not apply. See doc. 64, Omnibus Order dated February 3, 2012, 2012 WL 367240.4 Nonetheless, I deferred any consideration of the motion's remaining aspects for a number of reasons so that the defendants could conduct further discovery and the Receiver could supplement the summary judgment record and address my evidentiary concerns about the then state of the record.5 Id. Despite the fact that I deferred issuing a report and recommendation on the Receiver's initial partial summary judgment, the February 3 Order has distinct, contextual relevance to the current summary judgment record.

b. the February 3 Order

Aside from putting off the consideration of the summary judgment issues until further discovery could occur, the February 3 Order forewarned the parties, and particularly the clawback defendants (including Dancing $), about two interrelated points I considered important to the determination of any future summary judgment motion. The first reminded the clawback defendants about their obligations when responding to a summary judgment motion:

The second point underscored the evidentiary significance of Nadel's criminal proceedings for summary judgment purposes. In short, while Nadel's judgment did not carry any preclusive effect (as the Receiver argued), the clawback defendants could not ignore the summary-judgment heft of the criminal proceedings and the significant evidentiary hurdle those proceedings posed to them. My admonitions about this were specific (doc. 64 at 7-9)7:

The statutory sentencing scheme enforces the adjudicatory effect to be given to the restitution order. For example, 18 U.S.C. § 3664(l) provides:

The Order's conclusion again reminded the defendants about their burden-shifting obligations under the summary judgment scheme: "Nadel's criminal conviction, and the facts it necessarily embraces, not to mention the accessible proof available from that prosecution, are convincing evidentiary hurdles Wiand puts out for the Defendants to meet." See doc. 64 at 9-10.

c. new evidentiary material and Nadel's death

The Receiver's summary judgment papers move for the same factual finding as the original motion for partial summary judgment but add new evidentiary material including: the criminal judgment against Nadel on counts one through and fifteen in the indictment, the restitution order included within that judgment in the amount of $174,930,311.07, the sentencing transcript, the forfeiture order, and the declaration of forensic accountant (Maria Yip). See docs. 73-17; 73-18; 73-19; 74 (Yip Decl., March 23, 2012); 77 (Yip Supp Decl., May 11, 2012); 92-1 (Revision to Yip Decl., July 19, 2012); 98 (Yip Decl., Sept. 27, 2012); 104 (Yip Deck, Oct. 11, 2012). Moreover, in light of Nadel's death on April 16, 2012, the previous complaints about Nadel's personal letters and memos dissipated. Receiver now satisfied the unavailability demands of Fed.R.Evid. 804(a), and Nadel's statements against interest are appropriate evidentiary considerations for summary judgment purposes.

2. FUFTA

A vast majority of states have adopted the Uniform Fraudulent Transfer Act (UFTA), an act "designed to prevent debtors from transferring their property in bad faith before creditors can reach it." BMG Music v. Martinez, 74 F.3d 87, 89. (5th Cir.1996). Federal district and bankruptcy courts adopt a largely uniform practice allowing receivers to bring suits under UFTA against ponzi scheme investors to the extent that investors have received payments in excess of the amounts invested and those payments are avoidable as fraudulent transfers. Donell v. Kowell, 533 F.3d 762, 770 (9th Cir.2008) ("the policy justification is ratable distribution of remaining assets among all defrauded investors"). Hence, the innocent "winners" in a ponzi scheme should not be permitted to "enjoy an advantage over later investors sucked into the ponzi scheme who were not so lucky." Id. citing In re United Energy Corp., 944 F.2d 589, 596 (9th Cir.1991).

Under Florida's version ("FUTA") (see Fla. Stat. § 726.101, et seq.), like other UFTA schemes, a receiver may proceed under two theories, actual fraud or constructive fraud. See e.g. Wiand v. Waxenberg, 611 F.Supp.2d 1299, 1318-19 (M.D.Fla.2009); In re World Vision Entertainment, Inc., 275 B.R. 641 (M.D.Fla. 2002). And in count I, the Receiver proceeds under both of these theories. Under Fla. Stat. § 726.105(1)(a), codifying actual fraud, the Receiver claims the transfers of false profits were fraudulent because Nadel (the debtor) caused the hedge funds to make the transfers to Dancing $ as part of a scheme with actual intent to hinder, delay, or defraud creditors of Nadel, the fund managers and/or the hedge funds.12 As such, the Receiver alleges a right to repayment of the investors' commingled principal investment money in an amount equivalent to Dancing $'s false profits from one or more of the hedge funds. The Receiver also proceeds under Fla. Stat. §§ 726.105(1)(b) and 726.106(1), for constructive fraud.13 See doc. 1, ¶¶ 105-113.

Where a debtor engages in a ponzi scheme, proof of a ponzi scheme satisfies UFTA's "actual intent to hinder, delay, or defraud creditors" requirement. See Donell, supra, 533 F.3d at 770-71 citing Scholes v. Lehmann, 56 F.3d 750 (7th Cir.1995) (general rule is that to extent innocent investors received payments in excess of amounts of principal originally invested, payments are avoidable as fraudulent transfers); Wiand v. Waxenberg, 611 F.Supp.2d 1299, 1312 (M.D.Fla.2009) citing In re McCarn's Allstate Fin. Inc., 326 B.R. 843, 850 (M.D.Fla.2005) (existence of a ponzi scheme suffices as a matter of law to prove actual intent to defraud for purposes of Fla. Stat. § 726.105(1)(a)). To prove a ponzi scheme, the Receiver must establish: (1) deposits made by investors; (2) the Receivership Entities conducted little or no legitimate business operations as represented to investors; (3) the purported business operations of the Receivership Entities produced little or no profits or earnings; and (4) the source of payments to investors was from cash infused by new investors. Waxenberg, supra, at 1312. Here, the Receiver's motion for summary judgment adopts this ponzi-scheme method to establish that the monies transferred to Dancing $ were fraudulent transfers in violation of § 726.105(1)(a).

Although the Receiver points to the start date of Nadel's scheme as the critical date, the relevant period is the time of the transfers. In re Old Naples Sec., Inc., 343 B.R. 310, 319 (M.D.Fla.2006) (examining intent at time transfers made when interpreting Fla. Stat. § 726.105(1)(a)); Veigle v. U.S., 873 F.Supp. 623 (M.D.Fla.1994) (determining transferor's intent to defraud at time transfer made for purposes of Fla. Stat. 726.105(1)(a)); Bay View Estates Corp. v. Southerland, 114 Fla. 635, 154 So. 894 (1934) (fraud rests upon debtor's intent at time of the transfer). Hence, whether Nadel operated the hedge funds as ponzi scheme as early as 1999, as the Receiver proposes, is an unnecessarily broad question to examine. See doc. 1, ex. A. for Dancing $, the relevant time is from January 2008 through April 2008, the beginning and ending dates of its distributions. Accordingly, if the Receiver's ponzischeme evidence for this period is onesided (i.e., the evidence of actual intent to hinder, delay, or defraud creditors is so one-sided), the Receiver is entitled to summary judgment on the issue. Anderson, 477 U.S. at 255, 106 S.Ct. 2505 (when confronted with a summary judgment motion a court must decide "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law"); Hickson Corp. v. Northern Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir.2004) (same).

C. Discussion

With the above principles in mind, the summary judgment record overwhelmingly points to the fact that Nadel operated the hedge funds as a ponzi scheme by the time Dancing $ received its first distribution in January 2008. In sum, the Receiver's forensic accountant confirms what Nadel admitted in his criminal proceedings and that court adjudicated. Even when the summary judgment record is viewed in Dancing $'s favor, Dancing $ offers little to overcome the Receiver's properly supported motion.

1. an overview of the scheme

From 1999 through January 2009, Nadel, through Scoop Capital, LLC ("Scoop Capital") and Scoop Management, Inc. ("Scoop Management"), along with Christopher Moody and Neil Moody, through Valhalla Management, Inc. ("Valhalla Management") and Viking Management, LLC ("Viking Management") (Scoop Capital, Scoop Management, Valhalla Management, Viking Management are collectively the "fund managers") managed certain hedge funds including Valhalla Investment Partners, L.P. ("Valhalla Investment"), Viking Fund, LLC ("Viking Fund"), Victory IRA Fund, LLC ("Viking IRA Fund"), Victory Fund, Ltd. ("Victory Fund"), Victory IRA Fund, LTD ("Victory IRA Fund"), and Scoop Real Estate, LP ("Scoop Real Estate"). And throughout this period, Nadel misrepresented the hedge funds' performance. By defrauding investors through his control over the fund managers and the hedge funds, Nadel raised over $350 million dollars from hundreds of investors. While a large majority of hedge fund investors received no distributions of purported profits, or received distributions in amounts less than their investments, a number of investors received hedge fund distributions that exceeded their investments.

In late 2008 or early 2009, the house of cards crashed. The SEC filed an emergency action in this division on January 21, 2009, asking for a wide-ranging temporary injunction freezing Nadel's assets, requiring him to provide a sworn accounting, and prohibiting his travel outside the United States. The district judge quickly granted the request. See Securities and Exchange Commission v. Arthur Nadel, et al., Case No. 8:09-cv-87-T-26TBM. Coinciding with these events, a magistrate judge in the Southern District of New York issued a warrant for Nadel's arrest based on a complaint charging Nadel with securities fraud and wire fraud. At some point during all this (and likely before the enforcement order), Nadel fled.14 Eventually, the complaint in the Southern District ripened into a fifteen-count indictment that charged Nadel with securities fraud (counts one through six), mail fraud (count seven), and wire fraud (count eight through fifteen). Nadel pleaded guilty to all the counts, was sentenced to 168 months in confinement, and ordered to pay $174,930,311.07 in restitution (doc. 73). He died in prison on April 16, 2012.

2. Yip's analysis

The Receiver submits the analysis of his forensic accountant, Maria M. Yip ("Yip"), to support his contention that Nadel operated the hedge funds as a ponzi scheme. Yip analyzed records from 29 bank accounts, 24 brokerage and trading accounts, the hedge funds and fund managers' books and records, accounting records of the receivership entities, Advent Software investor accounting system activity, member status reports, tax records for Traders Investment Club and the receivership entities, and reports prepared by Riverside Financial Group analyzing account activity for brokerage accounts ("the Nadel documents").15 Yip opines that from at least December 1999 through January 2009, Nadel through the fund managers managed the hedge funds and grossly misrepresented their performance, and defrauded investors through his control of the hedge funds (Yip Decl. ¶ 25).16 Yip further opines:

Yip Decl. ¶¶ 47-50, March 23, 2012; Revision to Yip Decl. ¶ 8 (revising amount raised from $336 million to $327 million based on further review and analysis), July 19, 2012. Yip's review of the financial records and comparison of balance of principal invested by investors according to the K-1's issued by the hedge funds with the actual balance in the bank, brokerage and trading accounts during the years 1999 through 2008 revealed that Nadel significantly misrepresented the values in the investor accounts and the investor accounts had a fraction of the purported balances (Yip Decl. ¶ 59, March 23, 2012; Revision to Yip Decl. ¶ 9, July 19, 2012). She finds, based on a comprehensive review of the books and records of the hedge funds, that the funds were insolvent as early as 2000 and through and including January 2009 (Yip Decl. ¶ 82, March 23, 2012; Revision to Yip Decl. ¶ 10, July 19, 2012).

Yip states that Nadel, in combination with Christopher Moody and Neil Moody, raised $327 million from investors in connection with more than 700 investor accounts between May 1999 and January 2009. See Yip Decl. ¶¶ 47-48, March 23, 2012; Revisions to Yip Decl. ¶ 8, July 19, 2012. Her report indicates that investors received monthly statements for each of their respective accounts showing purported appreciation and increase in investor account balances that were in fact not true. Yip Decl. ¶ 50, March 23, 2012. Nadel controlled a number of bank, brokerage, and trading accounts from July 1999 through January 2009, and he transferred money received from investors among a number of those accounts. Investor funds were directly deposited into bank accounts maintained at SouthTrust (later acquired by Wachovia), Bank of America, and Northern Trust, and funds from these bank accounts were transferred to brokerage accounts for the purpose of investing the investors' funds. Yip Decl. 111151-53, March 23, 2012. Funds from these brokerage accounts were transferred back to the Hedge Funds' respective bank accounts to pay management fees based on purported account balances, management fees based on purported profits, and redemptions to investors. Nadel also transferred funds from these brokerage accounts to other accounts he controlled, including personal bank accounts at Wachovia Bank with names similar to Hedge Fund accounts. Yip Decl. ¶¶ 55-56, March 23, 2012. According to Yip, "Nadel created these accounts for two Hedge Funds on whose behalf he did not have authority to act ... [and he] had complete access and control of the funds deposited into these accounts." Yip Decl. ¶ 56, March 23, 2012.

Yip further declares that Nadel pooled funds received from investors and deposited into accounts, commingled these funds with other investors' money, and transferred the money from those accounts into other bank, brokerage, and trading accounts in which the money was further pooled and commingled with other investors' money. Yip opines that her review revealed that "Nadel pooled and commingled investors' monies regardless of with which Hedge Fund the monies had been invested; that Nadel not only commingled the monies in these accounts, he would also transfer funds into the brokerage accounts as necessary in order to have sufficient funds from which to pay redemptions; and that these funds would be transferred from the Hedge Fund brokerage account to the Hedge Fund bank account from which the investor would receive his or her redemption." Yip Decl. ¶ 58, March 23, 2012.

According to Yip, the balances of the principal invested by investors, as reflected by the K-1's issued by the Hedge Funds during the years 1999 through 2002, clearly showed that Nadel significantly misrepresented the values in the investor accounts, which had only a fraction of the purported balances. Yip Decl. ¶ 59, March 23, 2012; Revisions to Yip Decl. ¶ 9, July 19, 2012. See Table comparing balance of principal invested compared to actual account balances; Yip Decl. Ex. 59, March 23, 2012, containing balances purportedly in the accounts for the investors at each quarter end during the period of January 2003-December 2008. For example, according to Advent's investor statements, at the end of the first quarter of 2003 investors had invested a total of $49,363,230 with Nadel and the hedge funds, when in actuality the total balances in the bank, brokerage and trading accounts were $19,987,238. And, at the end of the fourth quarter of 2008, investors had invested a total of $294,512,345 with Nadel and the hedge funds when in actuality the total balances in the bank, brokerage and trading accounts were $1,338,471. Yip Decl. ¶ 61, March 23, 2012.

Yip concludes that analysis showed that for each quarter between the first quarter of 2003 and the fourth quarter of 2008, the Hedge Funds always had significantly less money in the financial accounts than the amounts deposited by investors. Yip Decl. ¶ 64, March 23, 2012. Moreover, Nadel also controlled Traders Investment Club, another investment vehicle purportedly operated separately from the hedge funds. Yip opines that, similar to the hedge funds, Nadel represented to investors that he had achieved high rates of return in order to induce investors to invest. Yip Decl. ¶ 28, March 23, 2012. Yip reviewed Traders' brokerage statements, Traders' bank statements, yearly federal income tax returns, Partners' Capital Balances statements from Advent and Individual Account Statements, and concluded that Nadel utilized investor principal to pay new investors, and in fact, used investor monies from the hedge funds to pay for Traders' investors' redemptions. Yip Decl. 65-72, March 23, 2012. As early as 2003, Traders did not have the assets necessary to pay the amounts represented as owed to investors, and investor distributions were paid with new investor funds, often from the Hedge Funds. Yip Decl. ¶ 74, March 23, 2012.

Nadel's records, according to Yip, show that Nadel lost more than $23 million over the period of September 1999 through December 2008. Specifically, Scoop Real Estate LP lost $6,637,880; Valhalla Investment Partners lost $3,114,011; Victory Fund Ltd. And Victory Funds IRA Fund lost $4,209,134; and Viking Fund LLC and Viking IRA Fund, LLC lost $9,116,715. Yip Decl. ¶ 78, March 23, 2012. Yip's review did not reveal any other sources of funding for Nadel's hedge funds or fund managers other than a negligible amount from Scoop Real Estate representing less than 1 % of the funds. Yip Decl. ¶ 79, March 23, 2012. After a comprehensive review of the books and records of the hedge funds that the funds were insolvent as early as 2000 and through and including January 2009.17 Revisions to Yip Decl. 1110 Table, July 19, 2012 (reflecting year end insolvency for years 2000-2002). See also Revisions to Yip Decl. Ex. 61 (Revised), July 19, 2012 (providing quarterly information reflecting insolvency during period of 2003-2008).

Dancing $ is one of the investors who experienced a net gain or "false profits." According to Yip, Dancing $ deposited a total of $675,000 in Nadel's scheme. More particularly, Dancing $ invested in Scoop Real Estate in October 2006 ($250,000), in July 2007 ($25,000), and in August 2007 ($100,000). And it invested in Valhalla in November 2006 ($250,000) and January 2007 ($50,000). According to the Receiver, Dancing $ received distributions totaling $782,172.11: one from Scoop Real Estate (January 2008 for $434,359.29) and two from Valhalla ($346,243.60 in January 2008 and $1,569.22 in April 2008). Hence, these "false profits" amount to $107,172.11 (the amount received from the scheme in excess of the amounts invested). See Yip Decl. ¶ 3, Sept. 27, 2012. There is no dispute as to whether Dancing $ received these distributions. See Responses to Requests for Admissions, doc. 99-5 (Morello Decl. Ex. D).

Yip's concluding opinions are:

Yip Decl. ¶ 87-92, March 23, 2012. In her revisions to her declaration, Yip further stated that:

Revision to Yip Decl. ¶ 12, Ex. B (schedule of gains and losses for each investor account), July 19, 2012.

3. Nadel's criminal proceedings and admissions

Nadel's admissions, his plea agreement, his testimony at his plea and sentencing hearings, and his criminal judgment are persuasive evidence supporting the Receiver's motion for partial summary judgment for the reasons I stated in my Order of February 3 and reiterated in Part B.1.b of this report. Nadel's guilty plea is appropriate for summary judgment consideration either under Fed. R. Evid. 807 or as a declaration or deposition for purposes of Rule 56(c) and carries a heightened standard of reliability and trustworthiness. See In re Slatkin, 525 F.3d 805, 812 (9th Cir.2008) (applying Rule 807's residual hearsay exception due to proceeding's reliability); Scholes v. Lehmann, 56 F.3d 750, 762 (7th Cir.1995) (a defendant's admissions in a guilty plea proceeding and in a plea agreement that is part of the guilty plea carry "veracity safeguards" exceeding a deposition). See generally In re Rothstein, 2010 WL 5173796 (S.D.Fla. Dec. 14, 2010) ("[c]riminal plea agreements are admissible to establish the existence of a Ponzi scheme and a wrongdoer's fraudulent intent" and "criminal convictions based on operating a Ponzi scheme establish fraudulent intent for the purposes of the fraudulent transfer provisions"); LaBella v. Bains, 2012 WL 1976972 (S.D.Cal. May 31, 2012) (granting summary judgment for receiver against multiple defendants where court took judicial notice of ponzi schemer's guilty plea agreement and found that he operated a ponzi scheme with actual intent to defraud creditors under UFTA); In re Madoff; 445 B.R. 206 (S.D.N.Y 2011) quoting In re Slatkin, supra, 525 F.3d at 814 ("A debtor's admission, through guilty pleas and a plea agreement admissible under the Federal Rules of Evidence, that he operated a Ponzi scheme with the actual intent to defraud his creditors conclusively establishes the debtor's fraudulent intent ... as a matter of law"); Armstrong v. Collins, 2010 WL 1141158 (S.D.N.Y. March 24, 2010) (finding schemer who defrauded investors ran a ponzi scheme and that the entities involved were never solvent based on schemer's testimony, his guilty plea and expert opinion). See also In re McCarn's Allstate Finance, Inc., 326 B.R. 843, 851 (M.D.Fla. 2005) ("Even if the information or indictment did not specifically label the fraud a `Ponzi scheme,' if the allegations in the information establish that the debtor ran a scheme whereby the debtor intended to defraud the debtor's creditors, evidence of a guilty verdict or plea agreement admitting the charges can establish the existence of a Ponzi scheme.").

When Nadel entered pleas of guilty to all the indictment's counts, he acknowledged, under oath, his understanding of the accusations and that a factual basis supported his pleas. See doc. 73-15, p. 10. Likewise, in his plea agreement, Nadel acknowledged that he was pleaded guilty because he was in fact guilty (doc. 73-15). As the Receiver points out, during Nadel's allocution, Nadel explained:

See Guilty Plea Transcript, doc. 43-15, p. 30. Nadel further stated that he directed his broker to make certain wire transfers among accounts that he controlled "for the purpose of facilitating and concealing the scheme to defraud...." Id. at p. 31.

At the sentencing hearing, Nadel spoke of his "victims" and clearly acknowledged his guilt:

See Sentencing Transcript, doc. 86-18, pp. 15:23-16:12. Nadel did not object to the restitution amount, nor did he object to those victims identified in his presentence report and included in his judgment. Similarly, when the court advised Nadel of the forfeiture calculation, $162 million, his counsel represented that he had no objection. See Preliminary Order of Forfeiture (doc. 73-19), and Sentencing Hearing Transcript (doc. 73-18). The court sentenced Nadel to 168 months of imprisonment. See Judgment, doc. 86-17. Nadel's plea agreement, his sworn admissions, his guilty plea, his failure to object to the court's restitution and forfeiture calculations (both premised on his scheme spanning from 1999 to 2009), and court's judgment support Yip's findings.19

Nadel's own statements further support the Receiver's motion. In a January 2009 letter found in a hedge fund office shredder by a Scoop Management employee ("Shredded Letter"), Nadel admitted that "[f]or more than ten [years], I have truly believed that [I could] trade my way out of this mess, and [only] in 2008 did it finally penetrate my addled [brain] that this is not to be. I have managed to ruin hundreds of lives, and I deserve whatever [I] ultimately receive." Nadel also sent a letter to his family after he disappeared in January 2009 admitting that he had been attempting to "`doctor' continuing losses for almost 10 years." In the letter, Nadel suggested that the hedge funds losses could be calculated by "go[ing] back as far as possible, to 1998 if we can, to Spear, Leads & Kellogg from Goldman, Sachs, and determine the actual trading losses." He stated that his "recollection of the more recent losses, say from 2001 on, is about an average of $20 million per year...." Nadel wrote a confidential memo that provided a background of himself and the hedge funds, including the operation of the investment clubs before the formation of the hedge funds. In the confidential memo, Nadel wrote:

See doc. 31-3, 31-4, 31-5.20

4. Dancing $'s rebuttal21

In response to this overwhelming evidence, Dancing $ offers little rebuttal evidence in admissible form. See Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548, (1986) (if the moving party makes the required showing, the burden shifts to the non-moving party to rebut that showing by producing counterevidence in admissible form). In an effort to show that Nadel did not control Valhalla Investment and Scoop Real Estate, Dancing $ filed the Receiver's responses to interrogatories (doc. 95-3) and an unauthenticated typewritten "statement" of Nadel dated January 24, 2011, obtained from CNBC's television show "American Greed." Dancing $ points to the Receiver's interrogatory response and the unsworn television statement as evidence that Valhalla Investment was operated, owned, and run by Neil and Chris Moody, not Nadel. "At best," Dancing $ posits, "the Receiver presents evidence that Nadel handled all of the trading activity for Valhalla as a third party advisor. There is no evidence from which to conclude as a matter of law that Nadel controlled Valhalla, required Valhalla [Investment] to make distributions, or had any role in managing the company." Per Dancing $, Nadel's corporation had a contract with Valhalla Investment to provide investment advisory services to Valhalla Investment, Valhalla Investment is not the alter ego of Nadel, and the Receiver lacks standing to assert a FUFTA claim against Dancing $ based on a distribution from Valhalla Investment. Dancing $ says the CNBC statement shows that "Valhalla fund, the first fund formed in 1999, was invested and traded by Neil Moody from inception to the end, not, as alleged by the Receiver, by Nadel." See Stillman Decl. 113.

None of this alters the overwhelming quantum of evidence the Receiver presents. First, Nadel's back-pedaling, selfserving statements (presumably made in the interview) are inadmissible hearsay and inappropriate for summary judgment consideration. Macuba v. Deboer, 193 F.3d 1316, 1323 (11th Cir.1999) (the general rule is that inadmissible evidence cannot be considered for summary judgment purposes). Next, Nadel's remarks do not carry the trustworthiness attached to his guilty pleas, his sworn statements made during his plea and his sentencing, and the resulting criminal judgment grounded on his pleas and a supporting independent factual basis. Fed.R.Crim.P. 11(b)(3); Scholes, 56 F.3d at 762 (ponzi schemer's backpedaling statements made in affidavit were appropriately rejected for summary purposes as schemer should not be able to retract admissions made in plea agreement and guilty plea which bind a party and have greater veracity safeguards). Moreover, I conclude that the record evidence shows Nadel controlled Valhalla Investment and Scoop Real Estate. See n. 21, supra.

Dancing $'s only other filing in opposition to the Receiver's partial summary judgment motion is a "Notice of Joinder in Opposition to Motion for Partial Summary Judgment by Defendants in Related Cases 10-cv-166, 10-cv-205, and 10-cv-210" (doc. 96). The defendants in those cases retained an expert witness, Harold McFarland. See Wiand v. Meeker, 8:10-cv-166-T17MAP, doc. 89-48, exhibit H; Wiand v. Morgan, 8:10-cv-205-T-17MAP, doc. 89-8, exhibit H; Wiand v. Lee, 8:10-cv-210-T-17MAP, doc. 125-8, exhibit H. The expert report McFarland completed for Meeker, Morgan, and Lee indicates that in his opinion there is "significant doubt as to whether these hedge funds were in fact a Ponzi-scheme from the beginning or simply a legitimate business enterprise that at some point became a Ponzi-scheme. While the Commission found it to be a Ponzischeme from 2008, there is insufficient information to determine when exactly, or if, it became a Ponzi-scheme before that." See McFarland Rpt. ¶ A(10) (Wiand v. Meeker, case no. 8:10-cv-166, doc. 89-9). Other defendants against whom the Receiver has filed claims have also retained McFarland as expert. Interestingly, McFarland's declaration from Wiand v. Rowe, case no. 8:10-cv245-T-17MAP, states "there is sufficient evidence to determine that these entities compromised an elaborate Ponzi scheme some time during or after 2006 ... [and] there are some artifacts of a Ponzi scheme as early as 2003." See McFarland Decl. ¶¶ C(1-2) (Wiand v. Rowe, case no. 8:10-cv-245, doc. 70). McFarland also testified in the Rowe affidavit that "At best, the only thing that can be said with complete confidence is that the evidence is conclusive that Nadel-Moody was insolvent and a Ponzi scheme from 2006 forward and inconclusive prior to 2005, further it is unlikely that Nadel-Moody was a Ponzi scheme prior to 2002." McFarland Decl. ¶ C(4) (Wiand v. Rowe, case no. 8:10-cv-245, doc. 70). See also McFarland Dep. 62:22-63:12 (Wiand v. Rowe, doc. 83-1) ("... the early years, '99 and 2000, 2001, were definitely not a Ponzi scheme. So I don't know when it was. I believe it was from 2006 forward. At this point it's my opinion that it was not in '99, 2000, 2001. It was some time after that. And the strongest evidence is pretty heavy at 2005, or so, it changed [into a Ponzi scheme].... By the end of 2006, I have no questions that it was a Ponzi scheme.")

Regardless of McFarland's inconsistent opinions, even he essentially concedes that Nadel, at the time of Dancing $'s distributions, operated the hedge funds as a ponzi scheme. In sum, Dancing $ has failed to create a triable issue of fact on this issue. See American Key Corp. v. Cole Nat'l Corp., 762 F.2d 1569 (11th Cir.1985) (finding trial court properly awarded summary judgment for defendant and did not err in assigning "little weight" to plaintiff's expert's affidavits because the affidavits did not create a material issue of disputed fact).22

5. affirmative defenses, false profits, and prejudgment interest

a. affirmative defenses

Dancing $ raises set-off as affirmative defense to the Receiver's FUFTA claim.23 The gist of the argument is as follows. Each of Dancing $'s 136 members invested various amounts into the LLC and received proportionate shares according to those investments. Dancing $, in turn, invested in Scoop Real Estate and Valhalla Investment. After receiving distributions from the hedge funds, Dancing $ passed those monies to its members proportionately. In December 2007, Elendow (presumably another LLC) was created. That new entity's ranks included many Dancing $ members (as many as 53) and new investors. Those Elendow members who came from Dancing $ used their hedge fund distributions to invest in Elendow. And (this where the set-off comes in), Elendow invested its members monies back into Scoop and Valhalla and lost the entirety of their investments (over $600,000). See doc. 115 (Waldman Decl. 11111-6). Dancing $ contends a set-off is appropriate given the losses many of its members suffered.

Set-off is an equitable concept, see Durham Tropical Land Corp. v. Sun Garden Sales Co., 106 Fla. 429, 151 So. 327, 328 (1932); yet, and despite the injustice suffered by those Dancing $ members who lost money in Elendow, it is difficult to fathom how the defense would apply here. Florida recognizes that to avail oneself of set-off in equity, the defendant must show an existing debt or demand against the complainant in favor of the defendant, and that the debt arose and existed under circumstances where disallowing it would be inequitable. Id. But, "[t]he very essence and basis for set-off is mutuality of claims; that is to say claims existing between the same parties and in the same right." Everglade Cypress Co. v. Tunnicliffe, 107 Fla. 675, 148 So. 192, 193 (1933); see also, e.g. Moran v. Goldfarb, 2012 WL 2930210 (S.D.N.Y. July 16, 2012) (rejecting set off or offset in clawback case). Elendow's debt claim is not Dancing $'s claim, notwithstanding their overlapping memberships. And the reason is the legal structure these investors chose to join: an LLC is a business entity created to provide "tax benefits akin to a partnership and limited liability akin to the corporate form." Olmstead v. F.T.C., 44 So.3d 76, 78 (Fla.2010) quoting Elf Atochem North Am., Inc. v. Jaffari, 727 A.2d 286, 287 (Del.1999); see also In re Slatkin, 243 Fed.Appx. 255, 259 (9th Cir.2007). In sum, I find equitable set-off, no matter the Court's sympathies, does not apply.

b. false profits

By his motion (doc. 97), and supported by Yip's declaration (See Yip Decl. 113, Sept. 27, 2012), the Receiver seeks summary judgment on count I for $107,172.11 plus prejudgment interest. Notably, Dancing $ does not dispute the Receiver's calculations as to the amount of the transfers, although it contests any award of prejudgment interests. Having determined that those these transfers avoidable under FUFTA, the Receiver is likewise entitle to summary judgment on the uncontested amount.

c. prejudgment interest

This Court exercises supplemental jurisdiction over the Receiver's FUFTA claims (doc. 1, ¶ 8). See 28 U.S.C. § 1367. As such, state law applies to any issue not governed by the Constitution or treaties of the United States or Acts of Congress. 28 U.S.C. § 1652; Erie R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Flava Works, Inc. v. City of Miami FL, 609 F.3d 1233, 1237 (11th Cir. 2010); see also Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 4520. Florida courts have long held the view that prejudgment interest is simply another element of pecuniary damages for making the plaintiff whole from the date of the wrongful loss. Bosem v. Musa Holdings, Inc., 46 So.3d 42, 45 (Fla. 2010) (reaffirming Florida's position since the turn of the last century). An award, however, is grounded in equity and not absolute. Blasland Bouck & Lee, Inc. v. City of North Miami 283 F.3d 1286, J297-98 (11th Cir.2002) (applying Florida law). Florida courts apply various considerations when evaluating the equities: the extent the plaintiff's conduct contributed to the delay between the injury and judgment; whether the prevailing party failed to mitigate damages; in matters involving public bodies, and in choosing between innocent victims, it is inequitable to put the burden of paying interest on the public. Id. The list is obviously illustrative as each case is different. But the driving focus demands balancing the equities at hand. As the Florida supreme court has said: "interest is not recovered according to a rigid theory of compensation for money withheld, but is given in response to considerations of fairness. It is denied when its exaction would be inequitable." Flack v. Graham, 461 So.2d 82, 84 (Fla.1984) quoting Board of Commissioners of Jackson County v. United States, 308 U.S. 343, 352, 60 S.Ct. 285, 84 L.Ed. 313 (1939).

In view of these principles, I conclude that to exact prejudgment interest from Dancing $ would be inequitable. Despite its position as a "net winner," compared to the greater number of "net losers" Nadel swindled, Dancing $ is certainly not a winning investor in the normal sense. Like the net losers, Dancing $ invested in the hedge funds assuming their legitimacy. That it received a return in excess of its investments was likely serendipitous. With the avoidance of those positive transfers (the amounts above principal invested), requiring Dancing $ to pay more out of its pocket in the form of prejudgment interest would not satisfy the goals for making the award. It would not make the "hedge funds" any more whole, as Dancing $ presumably could stand in line with the other net losers seeking compensation from the Receiver. Simply put, Dancing $ members (despite the LLC's legal fiction), have suffered enough.

D. Conclusion

As one court recently noted

Janvey v. Democratic Senatorial Campaign Comm., Inc. et al., 793 F.Supp.2d 825, 858 (N.D.Texas 2011) citing Donell, supra, 533 F.3d at 779. Upon consideration of the evidence before me, I find that Nadel operated the hedge funds as a ponzi scheme at the time of the transfers to Dancing $, and that the uncontroverted transfers to Dancing $ were made with the actual intent to hinder, delay, or defraud as required by Fla. Stat. § 726.105(1)(a). For the reasons given, it is hereby

RECOMMENDED:

1. That the Receiver's motion for summary judgment (doc. 97) be GRANTED and that the Clerk be directed to enter judgment for the Receiver and against Dancing $ in the amount of $107,172.11.

2. That the Receiver's renewed motion for partial summary judgment (doc. 72) be found moot.

3. That the Receiver's motion to strike report of Defendants' designated expert, Harold McFarland, and to Preclude His Testimony at Trial (doc. 102) be DENIED.

4. That all pending motions be denied and the Clerk directed to close the case.

IT IS SO REPORTED at Tampa, Florida on November 29, 2012.