[NOT FOR PUBLICATION--NOT TO BE CITED AS PRECEDENT]

          United States Court of Appeals
                     For the First Circuit


No. 00-1245

                       C. GERARD MILLER,

                      Plaintiff, Appellee,

                               v.

                    CHARLES E. HARDING, JR.,

                     Defendant, Appellant.


         APPEAL FROM THE UNITED STATES DISTRICT COURT

               FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. William G. Young, U.S. District Judge]


                             Before

                    Torruella, Chief Judge,
               Stahl and Lipez, Circuit Judges.



     Jeffrey N. Roy with whom Ravech & Roy, P.C. was on brief for
appellant.
     Gerry D'Ambrosio for appellee.




                        DECEMBER 5, 2000
              Per Curiam.    Charles Harding, the defendant, appeals

a district court order denying his motion for summary judgment

and granting that of the plaintiff, Gerard Miller.               Miller had

sued Harding for being the recipient of a fraudulent conveyance

from a third party, Keith Dominick, the operator of a Ponzi

scheme.1      Because Harding has not raised, and thus has waived,

the one argument that could merit a reversal, we affirm.

                                  I. BACKGROUND

              The following facts have been drawn from the district

court's opinion in this case, as well as from CFTC v. Dominick,

(M.D. Fla. 1996).

              Keith Dominick operated his Ponzi investment scheme

from February 1992 through April 1994.             During that time, he

took investments from approximately 70 pool participants, adding

up   to   a   total   of   $5.9    million.   He   represented    to   these

investors that their money was to be invested in the commodities

market, and that they would receive very high returns.             Over the

course of those years, Dominick in fact invested only about $2



      1
      A Ponzi scheme is a fraudulent investment strategy wherein
early investors are paid phony returns using later investors'
money. These returns, which tend to be unusually high, serve as
a marketing tool to lure in new investors. Little, if any, of
the money ever gets invested as promised, and the scheming pool
operator embezzles much of it. Dominick ran such a scheme from
early 1992 through April 1994. He did so by selling shares in
an investment company he had acquired to implement the ruse.

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million of the $5.9 million he attracted.               The remainder was

either dispersed to early investors as a spur to attract new

business, or embezzled for his own needs (including the purchase

of his home and the payment of his federal taxes, among other

things).      On    September   14,    1993,    in   furtherance    of   his

activities, Dominick acquired Main Street Investment Group, Inc.

[hereinafter "Main Street" or the "corporation"].              After that

date, he conducted his investment/Ponzi scheme through that

entity.

            Harding made all of his investments between September

and December, 1992.      During that period, he invested a total of

$185,000.    Subsequently, over the period of time from December

1992   through     February   1994,    he    received   "returns"   on   his

investment totaling $497,000.               In November 1993, Miller, a

lawyer, purchased 5,000 shares in Main Street at a cost of $200

per share, for a total of $1 million.           He received one return on

his investment, $3,500 in the form of a wire transfer to a third

party made at his request, but lost the remaining $996,500

entirely.    In April 1994, Miller reported what he believed to be

suspicious activity by Main Street and Dominick to the FBI and

the CFTC.    On June 15, 1994, the CFTC filed a complaint against

Dominick and Main Street in the United States District Court for

the Middle District of Florida, alleging violations of the


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Commodity Exchange Act, 7 U.S.C. §§ 1 et seq.                As a result of

that       filing,   an   equity   receiver   for   both   Main   Street   and

Dominick was appointed.            The receiver was granted very broad

powers with respect to Dominick and Main Street.2

              The equity receiver demanded $312,000 from Harding,

representing the difference between Harding's investment and his

return.        Ultimately, Harding settled with the receiver for

$215,000.       Later, in the United States District Court for the

District of Massachusetts, Miller sued Harding for $97,000, the

remainder of his profit, on the basis that this sum had been

fraudulently conveyed to Harding by Dominick, a tort debtor of




       2
       The equity receiver was granted the power to take over
Dominick's and Main Street's assets, including funds of
investors, and to

       investigate the assets, liabilities, transfers of real
       and personal property, commodity trading activity and
       commodity pool operation of defendants Dominick and
       Main Street and institute such actions and legal
       proceedings as the Receiver deems necessary against
       individuals, corporations, partnerships, associations
       or unincorporated organizations for the purpose of
       recovering funds or property of defendants Dominick
       and Main Street, including funds of investors, which
       the Receiver may claim to be wrongfully or improperly
       in the possession, custody or control of others.

CFTC v. Dominick, No. 94-661-CIV-ORL-18 (M.D. Fla. July 15,
1994) (agreed order of preliminary injunction and appointment of
receiver). The equity receiver was to represent the interests
of the corporation and its investors.

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Miller.3   Harding defended on the ground that Miller's claim

involved harm to the corporation, and thus belonged to the

equity receiver, who had already settled it.     Harding did not

respond to Miller's argument that he was suing on the basis of

a transfer from Dominick, as his tort debtor, and not one from

the corporation.   The district court granted summary judgment to

Miller and denied it to Harding, awarding Miller $97,000.   This

appeal followed.




     3 Miller is a tort creditor of Dominick on the basis of
Miller's claim for fraud in the inducement. Miller obtained a
default judgment against Dominick for this tort on May 7, 1997,
but Dominick was judgment-proof.

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                              II. DISCUSSION

            An equity receiver, like a bankruptcy trustee, has

standing for all claims that would belong to the entity in

receivership, and which would thus benefit its creditors and

investors,    but   no   standing   to     represent   the   creditors   and

investors in their individual claims.            See Scholes v. Lehmann,

, 753 (7th Cir. 1995) (addressing this issue in a

Ponzi scheme receivership case); see also Fisher v. Apostolou,

, 879 (7th Cir. 1998) (making the same observation

in a bankruptcy case).        For this reason, Miller's only possible

claim   against     Harding   is   for   a   fraudulent   conveyance     from

Dominick himself, as an individual tort debtor to Miller, and

not for a fraudulent conveyance from the corporation in which

Miller had invested.      The latter claim belonged to the receiver,

who has already settled it.          We shall thus consider Miller's

complaint only to the extent that it is based on the former

theory and not the latter.

            Miller's complaint did not properly allege a fraudulent

conveyance.     We have described the nature of an appropriate

fraudulent conveyance claim by setting out the three paradigm

examples.    See Boston Trading Group, Inc. v. Burnazos, 

, 1508 (1st Cir. 1987).          In all three examples the debtor

transferred his own funds to someone else in an effort to avoid


                                     -7-
payment to his creditors.   See 

creditor's claim

is against the transferor of the funds, the only money to

consider is that which in fact belongs (or belonged, prior to

the transfer) to the debtor.

         In his own complaint, however, Miller makes it clear

that the monies transferred to Harding never did rightfully

belong to Dominick.     The gravamen of Miller's allegations is

that, with respect to both his investments and the investments

of others, Dominick wrongfully diverted funds earmarked for

investment in the commodities market to his own use or to early

investors in the Ponzi scheme (such as Harding).         By accusing

Dominick of wrongfully siphoning funds for his own use, Miller

unwittingly acknowledges the defect in his claim.       The complaint

thus fails to set forth an essential element of Miller's claim

against Harding: that the $97,000 sought in this lawsuit ever

belonged to Dominick.

         Unfortunately,     however,    Harding   has     failed   to

appreciate the nature of Miller's claim from beginning to end,

and thus has not responded to it.       In the district court, and

now again on appeal, Harding missed the essential theory of

Miller's case: that, as the victim of Dominick's fraudulent

inducement, he (Miller) was a tort creditor of Dominick's since

the time of his investment.      Absent the key defect we have


                               -8-
pointed out, this could be the basis for a valid claim of

fraudulent conveyance.       Harding thus overlooked the fact that

this was a separate claim that belonged to Miller, and not to

the corporation, and failed to defend himself against it by

pointing out the defect.      As a result of this oversight, some of

Harding's    appellate     arguments,      like    his   summary      judgment

arguments, are entirely beside the point.

            There   are,   however,    three      arguments    presented      by

Harding which, if we were to accept, would provide bases for

overturning the district court's judgment in favor of Miller:

(1) that Miller is collaterally estopped from relitigating the

question    of   Harding's   total    liability;     (2)    that     there   was

adequate    consideration    for     the   transfer;     and   (3)    that   the

district court misinterpreted the definition of "creditor" under

fraudulent transfer law.      On the latter two issues, which go to

the merits of Miller's claim, we adopt the reasoning of the

district court and affirm on those bases.                  As to collateral

estoppel, however, we differ with the district court's holding

that Miller and the receiver lack privity and that Miller did

not have a full and fair opportunity to litigate whether the

$97,000 sought in this lawsuit was fraudulently transferred.

The fact remains, however, that the Florida proceedings are not

yet final, and the equity receiver's settlement with Harding is


                                     -9-
still susceptible of being set aside.   Collateral estoppel thus

cannot apply.   See Biggins v. Hazen Paper Co., 111 F.3d 205,209

(1st Cir. 1997) ("Collateral estoppel, now often called issue

preclusion, prevents a party from relitigating at a second trial

issues determined between the same parties by an earlier final

judgment . . .").

         Although Harding may not have achieved the result he

expected when he settled with the equity receiver, that is due

to his failure to controvert the claim that Miller has made

against him in this action.   As a policy matter, individuals in

Harding's position should be able to settle with receivers

without fear of this sort of litigation.       Because Miller's

success in this case is due Harding's waiver of the proper

defense, we do not expect that it will encourage future actions

among parties similarly situated to those here.

         Accordingly, and with some reticence, the opinion below

is AFFIRMED.    No costs.




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