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govinfo:USCOURTS-ctd-3_15-cv-00675-100
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
IFTIKAR AHMED,
Defendant, and
IFTIKAR ALI AHMED SOLE PROP; I -CUBED
DOMAINS, LLC; SHALINI AHMED; SHALINI
AHMED 2014 GRANTOR RETAINED ANNUITY
TRUST; DIYA HOLDINGS LLC; DIYA REAL
HOLDINGS, LLC; I.I. 1, a minor child, by and
through his next friends IFTIKAR and SHALINI
AHMED, his parents; I.I. 2, a minor child, by and
through his next frie
nds IFTIKAR and SHALINI
AHMED, his parents; and I.I. 3, a minor child, by and
through his next friends IFTIKAR and SHALINI
AHMED, his parents,
Relief Defendants.
Civil No. 3:15-cv-675 (JBA)
August 23, 2023
RULING ON RECEIVER’S MOTION FOR A PARTIAL STAY AND DEFENDANT’S MOTION
FOR A FULL STAY OF LIQUIDATION
Receiver Stephen M. Kindseth moves [Doc. # 2555] for an order partially staying the
Liquidation Order [Doc. # 2147], the Court’s Order approving the Phase 1 report w ith
modifications [Doc. # 2395], and the February 27, 2023 Order approving apartment sale
procedures [Doc. # 2445] (“the Liquidation Orders”) . Receiver requests a stay as to
liquidation of assets owned by the Relief Defendants in whole or that are jointly owned
between Defendant and the Relief Defendants, identified in Exhibit A of his motion, and takes
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the position that the Liquidation Orders otherwise require him to continue liquidating and
engaging in other actions with respect to the remaining Remand Assets. (Id.)
Defendant Iftikar Ahmed and Relief Defendant Shalini Ahmed disagree; Defendant
Ahmed cross-moves for a full stay of liquidation, interpreting the Second Circuit’s dismissals
of the appeals of this Court’s prior liquidation orders as moot to mean that the liquidation
orders “are not valid and new orders on liquidation” must be ordered before the Receiver
can proceed. (Def.’s Mot. for Liquidation Stay [Doc. # 2557].) Relief Defendants join
Defendant’s motion (Relief Def.’s Response to Receiver’s Stay Mot. [Doc. # 2574]); Ms.
Ahmed additionally argues that the Ahmeds intend to seek further appellate review and that
state law prevents liquidation of some of the assets, which she maintains are further reasons
to stay liquidation. (Ms. Ahmed’s Response to Receiver’s Stay Mot. [Doc. # 2562].)
The SEC joins Receiver’s motion for a partial stay as to the assets owned by Relief
Defendants but argues additionally that the Court should clarify that jointly owned assets
are subject to liquidation under an alternative holding to the nominee analysis, thus making
any “undisputed” jointly owned assets subject to liquidation (SEC’s Response to Receiver’s
Mot. [Doc. # 2572]); the SEC opposes Defendant’s motion for the stay of any assets other
than those fully owne d by Relief Defendants and not affirmed by the Second Circuit as
nominee assets on appeal. (SEC’s Response to Def.’s Mot. [Doc. # 2573].) Defendant and Ms.
Ahmed both oppose the SEC’s request for the Court to issue clarification as to its prior
judgment regarding jointly owned assets, arguing that the Court may not do so until the
mandate issues and releases jurisdiction to resolve the remand issues back to this Court, (see
[Docs. ## 2583, 2589, 2590]); Receiver takes no position on the SEC’s request. (Receiver’s
Reply to Responses to Mot. for Partial Stay [Doc. # 2587].)
Background
A. The Second Circuit’s Order
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The Court assumes familiarity with the factual and procedural background of this
case. Relevant to this motion, this Court granted summary judgment to the SEC on liability
on March 29, 2018. United States Sec. & Exch. Comm'n v. Ahmed, 308 F. Supp. 3d 628 (D. Conn.
2018). On September 6, 2018, the Court granted a perm anent injunction, and awarded
$41,920,639.00 in disgorgement and $21,000,000 civil penalties for a total of
$62,920,639.00. United States Sec. & Exch. Comm'n v. Ahmed, 343 F. Supp. 3d 16, 30 (D. Conn.
2018), vacated and remanded on other grounds , 72 F.4th 379 (2d Cir. 2023) (“Remedies
Judgment”) [Doc. # 955]). The opinion also awarded interest/gains accrued on frozen assets
and ruled on the assets available to satisfy the judgment. Id. On December 14, 2018, the Court
amended the judgment (Amend. J. [Doc. # 1054]) to include prejudgment interest of
$1,491,064.01 for the period between the Court’s judgment and the order freezing the
Receivership assets, as well as “any interest or gains accrued on disgorged frozen assets from
the date of the Court’s freeze order.” (Id. at 4.) Defendants appealed the Amended Judgment,
and the SEC moved for a limited remand; the Second Circuit remanded for the Court to
determine whether § 6501 of the National Defense Authorization Act warranted issuance of
another amended judgment . Accordingly, the Court issued a judgment (“Redetermined
Amended Judgment” [Doc. # 2011] ) increasing the disgorgement obligation by
$ 22,251,007.04, and prejudgment interest by $ 8,264,734.33. The Court approved a
proposed plan of liquidation submitted by Receiver (“First Liquidation Order” [Doc. # 2147])
and approved with modification the Phase I report by Receiver that included the Receiver’s
plan to begin liquidating unique assets as part of Phase II (“Phase I Approval Order” [Doc. #
2395].)
Defendants appealed the Remedies Judgment, the Amended Judgment, the
Redetermined Amended Judgment, the First Liquidation Order, and the Phase I A pproval
Order. The appeals of the First Liquidation Order and the Phase I Approval Order were held
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in abeyance before they were briefed , pending resolution of the appeals of the judgments .
Relief Defendants appealed regarding (1) whether the Court correctly applied the nominee
doctrine, (2) the calculation and award of pre-judgment interest, (3) the imposition of gains
on frozen assets and the imposition of prejudgment interest on that amount, and (4) the
calculation and award of post- judgment interest. (SEC v. Ahmed, Case No. 21-1686, Relief
Defs.’ Brief [Doc. # 79] (2d Cir. Nov. 11, 2021. )) Defendant appealed (1) the retroactive
application of the NDAA, (2) the imposition of disgorgement obligations, including the
calculation of pre -judgment interest, actual gains, and the appropriate rate for post-
judgment interest. (SEC v. Ahmed, Def.’s Brief [Doc. # 82].) He also appealed the underlying
summary judgment liability order, as well as the amount of the penalty. (Id.)
After the appellate briefs were filed, Relief Defendants filed a motion on December 5,
2022 with the Second Circuit requesting a stay of implementation of the Court’s December
2, 2022 Order approving the Phase I report and authorizing the Receiver to proceed with
Phase II of the liquidation “pending appeal.” (SEC v. Ahmed, Relief Defs.’ Motion to Stay [Doc.
# 169].) They filed an emergency motion on December 8, 2022, to stay liquidation of the
MetLife insurance policy until their earlier motion to stay [Doc. # 169] was ruled on by the
Second Circuit (SEC v. Ahmed, Relief Defs.’ Emergency Mot. to Stay [Doc. # 174]); the Second
Circuit granted the motion on December 22, 2022. (SEC v. Ahmed, Order Granting Emergency
Motion to Stay, [Doc. # 192]). Relief Defendants also moved on April 8, 2023 for an
emergency stay of liquidation of the two NYC apartments until its earlier motion to stay was
ruled on, which the Second Circuit granted on May 4, 2023. (See SEC v. Ahmed, [Docs. ## 199,
210].)
On June 28, 2023, the Second Circuit issued its decision on the A mended Judgment
and the R edetermined Amended Judgment and dismissed the appeals of the Phase I Order
and motion to stay liquidation as moot. United States Sec. & Exch. Comm'n v. Ahmed, 72 F.4th
Case 3:15-cv-00675-VDO Document 2593 Filed 08/23/23 Page 4 of 15
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379 (2d Cir. 2023). T he Second Circuit affirmed the Court’s exclusion of Defendant Ahmed
from discovery of materials subject to a protective order, denial of access to frozen funds to
hire counsel, calculation of his disgorgement obligation, and retroactive application of the
2021 amendments to the Securities Exchange Act of 1934 to his disgorgement application.
Id. at 393, 389- 90. The Second Circuit also affirmed the Court’s calculation and award of
prejudgment interest. Id. at 389-90.
However, the panel concluded that the Court “should have ensured that consequential
gains on frozen assets were not unduly remote from Ahmed’s wrongdoing or, in other words,
were attributable to the fraud, ” id. at 406, and remanded for the C ourt “to reassess actual
gains in light of Liu.” Id. at 407. It also held that the Court “should have applied an asset-by-
asset approach to the nominee theory.” Id. at 407. However, the Second Circuit affirmed the
Court’s nominee doctrine analysis as to the Iftikar A. Ahmed Family Trust, MetLife Policy,
and the Fidelity x7540 account. Id. at 409. With the exception of the findings on those assets,
the Second Circuit “vacate[d] and remand[ed] the [Court’s] disgorgement as to the Relief
Defendants’ assets.” Id. at 410.
Finally, the Second Circuit denied the Defendant and Relief Defendants’ appeals of the
Court’s liquidation orders issued January 11, 2022 and December 2, 2022 as moot , denied
Defendants’ motion for a liquidation stay as moot, and vacated all stays —including the
Second Circuit’s stay of the liquidation of the life insurance policy [Doc. # 2491] and of the
two apartments in New York City. [Doc. # 2248]. Id.
B. Liquidation Status of Receivership Assets
After the Second Circuit’s decision issued, the Receiver filed a status report
identifying which assets he believed were unaffected by the Second Circuit’s order, and those
that he viewed as impacted by the decision. (Receiver’s Status Report [Doc. # 2554] at 2-3.)
The Receiver reports that non- unique asset liquidation has resulted in proceeds of over
Case 3:15-cv-00675-VDO Document 2593 Filed 08/23/23 Page 5 of 15
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$102,433,000. ( Id. at 4.) As for nonunique assets, the Receiver had taken steps towards
listing the Apartments in NYC for marketing and sale, but paused those efforts after the stay
was issued by the Second Circuit in May 2023; he continues to evaluate the best way to
realize value from the Receivership’s Estate in Essell Farm, LLC; he has obtained appraisals
for miscellaneous personal property including jewelry, coins, art, and a designer handbag;
he has not yet liquidated the MetLife life insurance policy, but is now prepared to do so
because the Second Circuit’s stay on its liquidation has been lifted; he has not been successful
in liquidating the other two life insurance policies titled to the Iftikar A. Ahmed 2010
Irrevocable Trust; and he continues to realize value from interests in “Closely Held Entities,
the Non-Forfeited Interests in Oak Management Corporation, and the partnership interest in
Oak Management Corporation-advised investment entities.” (Id. at 4-6.)
The Receiver has categorized the Receivership Assets into four categories:
(1) Defendant titled assets (directly or indirectly);
(2) Relief Defendant titled assets affirmed on appeal as nominee of the Defendant;
(3) Defendant titled assets held jointly with a Relief Defendant; and
(4) Relief Defendant titled assets.
The status report also contains an attached chart of those assets noting the status of
their liquidations; in total, he estimates that assets held by the Receivership Estate total
approximately $115,111,436.11. $43 million of that amount is reserved for tax payments.
(See Doc. # 2570 at 4.)
Legal Standard
“A district court may stay an action pursuant to the power inherent in every court to
control the disposition of the causes on its own docket with economy of time and effort for
itself, for counsel, and for litigants.” Frank Brunckhorst Co., LLC, v. Castellini, 17- CV-2324,
2018 WL 1788149, at *4 (E.D.N.Y. Feb. 28, 2018) (internal quotations omitted). “The party
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requesting a stay bears the burden of showing that the circumstances justify an exercise of
that discretion.” Miller v. City of Ithaca , 10- CV-0597, 2019 U.S. Dist. LEXIS 57184, at *4
(N.D.N.Y. Apr. 3, 2019). Courts consider, among other factors, “(1) whether the stay applicant
has made a strong showing that he is likely to succeed on the merits; (2) whether the
applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will
substantially injure the other parties interested in the proceeding; and (4) where the public
interest lies.” Id.
Discussion
Receiver represents that he intends to continue with liquidation of assets in the first
two categories—Defendant titled assets and Relief Defendant Titled Assets affirmed as
nominee assets on appeal —and seeks a stay of liquidation of the assets in the seco nd two
categories, Jointly Titled Assets and Relief Defendant titled assets. (Receiver’s Stay Mot.) The
SEC “does not dispute that relief sought in the Motion is appropriate on the current record,”
but requests that the Court “clarify” that a subset of the Jointly Titled Assets— “ namely nine
financial accounts, nine gold bars, and a painting called “Ashoka’s Pillar” —may still be
liquidated for the reasons discuss infra at Section III(A). Defendant requests a stay of the
liquidation of all assets, which Ms. Ahmed and the other Relief Defendants join, arguing that
the Second Circuit’s ruling made the Court’s prior judgments a nullity, and thus, no
liquidation can proceed until the mandate issues and a new liquidation order and judgment
are issued.
A. Jointly Held Assets
Relief Defendants argued in summary judgment briefing on damages that Ms. Ahmed
was entitled to a portion of the marital estate because she managed certain assets, acting as
the “family CIO.” The Court held in its Remedies Judgment that
[e]ven if Ms. Ahmed legitimately managed the family assets, Relief Defendants
provide no authority that where a spouse manages assets which were
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fraudulently acquired by the other spouse, the spouse managing those assets
somehow gains an ownership interest in them such that the assets cannot be
used to satisfy a judgment against the other spouse. Further, assuming Ms.
Ahmed managed assets which were not fraudulently obtained, those jointly
controlled assets can nevertheless be used to satisfy Defendant’s judgment.
(Id. at 26) (emphasis added). The Court added in a footnote that regardless of whether Ms.
Ahmed in fact managed family assets, “the Court need not make this determination given its
conclusion . . . that the Court can reach jointly owned assets to satisfy a judgment against
Defendant.” (Id. n. 22); SEC v. Smith, 646 Fed. Appx. 42, 43 (2d Cir. 2016) (rejecting the relief
defendant’s argument that the district court erred in applying all assets in a jointly controlled
account – held only in the name of a relief defendant – to satisfy final judgment against
defendant) (Id. at 26-27).
The Second Circuit directed that the “district court’s disgorgement order” was
vacated and remanded “as to the Relief Defendants’ assets” and that if on remand, the Court
“finds that an asset is not nominally owned by one of the Relief Defendants,” this Court could
“consider whether an alternative theory of relief -defendant liability permits disgorgement
of the asset”, such as “ Cavanagh I liability or a joint ownership theory.” Ah med, 72 F.4th at
410. It noted in a footnote that the “parties dispute whether the district court’s joint-
ownership analysis was dicta or an alternative holding,” but declined to weigh in because the
“record is unclear, and the district court is best positioned to clarify on remand.” Id. at n. 21.
The SEC argues that the Court should clarify the portion of the Remedies Judgment
detailed above and state that its joint- ownership analysis was , in fact, an alternative
holding.
1 Ms. Ahmed maintains that the Court cannot yet clarify the issue of joint ownership
because the Second Circuit has not yet issued its mandate and formally remanded the case.
(Ms. Ahmed’s Response to Def.’s Mot. to Stay Liq. [Doc. # 2583] at 3 -4.) The SEC disagrees,
1 The Receiver takes no position with respect to the SEC’s argument on this point. ( See
Receiver’s Reply to Responses to its Stay Mot. at 6.)
Case 3:15-cv-00675-VDO Document 2593 Filed 08/23/23 Page 8 of 15
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arguing that the Court retains the jurisdiction to issue clarifications based on Burger King
Corp. v. Horn & Hardart Co., 893 F.2d 525, 527 (2d Cir. 1990) , holding that a district court
could issue an amended judgment to “clarify the court’s intended disposition of the case”
even after an initial notice of appeal had been filed . Burger King Corp., however, is
distinguishable; there, the Second Circuit had deemed the “initial judgment . . . not to be final
because it did not dispose of Burger King’s complaint” and thus considered the notice of
appeal from the initial judgment premature, instead considering only the appeal from the
amended judgment. The Court here is faced with a very different procedural posture; where
the clarification in Burger King Corp. came before the Second Circuit’s ruling, the SEC’s
motion comes after the Second Circuit has already issued an order vacating a portion of the
very judgment the SEC asks for the Court to clarify.
When the Second Circuit wishes to allow the district court to clarify its prior
judgment, it may “remand without vacatur in order to allow for amendment of the written
judgment.” United States v. Santiago , 384 F.3d 31, 37 (2d Cir. 2004). Here, however, the
Second Circuit specifically vacated the Court’s judgment as to any assets owned by the Relief
Defendants in whole or in part aside from the three assets specified. See Ahmed, 72 F. 4th at
410. Thus, the Court cannot merely “clarify” whether the language about joint ownership
was an alternative holding because there is no affirmed judgment as to those assets to clarify;
rather, at this point, any clarification would result in an amended judgment—and despite the
SEC’s arguments, the Court does not yet have the jurisdiction to issue an amended judgment
because “jurisdiction follows the mandate.” United States v. Rivera, 844 F.2d 916, 921 (2d Cir.
1988). While this rule is not absolute, it does not permit for rulings “on the merits of the
dispute” or rulings that have the “potential to create confusion or waste of time as to any
matter still under consideration at the Circuit Court.” In re Adler, Coleman Clearing Corp., 469
F. Supp. 2d 112, 116 n.2 (S.D.N.Y. 2007); see also United States v. Yonkers Bd. of Educ., No. 80
Case 3:15-cv-00675-VDO Document 2593 Filed 08/23/23 Page 9 of 15
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CIV. 6761 LBS, 1999 WL 509524, at *2 (S.D.N.Y. July 19, 1999) (“the cardinal principal [of the
mandate rule is] that a district court should not interfere to modify the substance of the
matters presently before an appellate tribunal.”)
Here, both Defendant and Relief Defendants have moved for an extension of time to
move for panel or en banc rehearing of this case, which if granted, may impact the issue of
the Relief Defendant jointly -held assets; even if re -hearing is not granted, the r elief sought
by the SEC goes to the very heart of one of the substantive issues that is currently before the
Second Circuit—i.e., whether assets held jointly or in full by Relief Defendants may properly
be used to satisfy the judgment against Defendant . Thus, the Court determines that it does
not have the jurisdiction to issue the clarification that the SEC seeks.
B. Motions to Stay
As an initial matter, Defendant Ahmed also argues that this Court cannot allow any
liquidation to proceed until a formal mandate has been issued; however, the mandate rule
“should not be applied mechanically” to stop all proceedings at the district court level,
Yonkers Bd. of Educ ., 1999 WL 509524 at *2, but instead should be guided by concerns of
judicial efficiency. A district court may take certain actions during the pendency of an appeal
if it does so “(1) in a manner that does not impact the substance of the issues before the
appellate court or (2) to preserve the status quo.” Id. Thus, ordering a stay of certain assets
while permitting the continuation of liquidation of other assets is fully within the scope of
those limitations so long as it does not contradict the directives of the Second Circuit.
To evaluate whether a partial or full stay is appropriate at this stage, the Court must
first determine whether further liquidation is required to satisfy the damages affirmed by
the Second Circuit based on the amount of the affirmed judgment and the assets indisputably
available to satisfy it, or whether as it stands, the amount of Receivership Assets liquidated
thus far is likely to satisfy that amount, and further liquidation would be necessary only in
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the event that the Court determines after addressing the remanded issues that Defendant is
liable for additional damages, and that some of the assets liquidated thus far cannot be used
to satisfy the judgment. The Second Circuit affirmed this Court’s findings as to the amount of
Defendant’s initial disgorgement obligation, as well as the Court’s decision to increase it
based on the NDAA, the calculation of pre-judgment interest, and the civil penalty. Thus, the
final judgment amount of $64,171,646.14 in disgorgement, plus $9,755,798.34 in
prejudgment interes t, and $21,000,000 in civil penalties , leaves the Court with
$94,927,444.48 in affirmed damages against Defendant that neither side disputes for
purposes of this motion.
However, the parties do dispute whether post -judgment interest on amounts other
than the appreciation award2—the disgorgement, civil penalty, and prejudgment interest—
still runs from the date that partially vacated orders were entered, or whether it has been
vacated by the Second Circuit’s order and should run from whenever this Court iss ues a
second amended judgment. The Receiver takes the position that the total judgment amount
affirmed by the Second Circuit as of July 21, 2023, is $103,380,535.06, which is the combined
total of the Amended Judgment’s disgorgement and prejudgment interes t amounts, the
Redetermined Judgment’s disgorgement and prejudgment interest amounts; and post-
judgment interest on the amounts in both judgments, excluding the appreciation award
amounts vacated. (Receiver’s Status Report [Doc. # 2554] at 3.) Mr. and Ms. Ahmed disagree,
arguing that the Second Circuit affirmed only the $94.9 million figure because it “did not
affirm post -judgment interest.” ( Ms. Ahmed’s Response to Receiver’s Stay Mot. at 7 )
2 The post -freeze appreciation, or “actual gains”, is now subject to recalculation, and the
Second Circuit’s decision to vacate this Court’s application of the nominee doctrine means
that this Court will have to determine which Receivership assets are subject to disgorgement,
and thus, the value of the Receivership Estate; in turn, that will require a recalculation of
post-judgment interest on the appreciation award, if the Court chooses to impose one. On
this much, the parties agree.
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(emphasis omitted). Instead, Mr. and Ms. Ahmed both argue that the Court’s prior liquidation
orders are no longer valid in light of the Second Circuit’s decision, and that the Court has to
enter a revised judgment which will mark the moment judgment has been meaningfully
ascertained for purposes of post-judgment interest calculation; additionally, they argue that
because over $102 million has already been liquidated, no further liquidation can occur until
it has been determined if, and how much, the Defendants’ liability in addition to the $94.9
million will be.
Post-judgment interest “properly runs from the date of the entry of judgment.” Kaiser
Aluminum & Chem. Corp. v. Bonjorno , 494 U.S. 827, 835, (1990). If a damages judgment is
completely reversed or the judgment on damages are not supported by the evidence, then
they have not been “ascertained” in “any meaningful way.” Id. at 836. However, u nder Fed.
R. App. P. 37(a), “[w]hen the [c]ourt [a]ffirms[,]”, then “[u]nless the law provides otherwise,
if a money judgment in a civil case is affirmed, whatever interest is allowed by law is payable
from the date when the district court's judgment was entered.” Fed. R. App. P. 37. Thus,
because the Court’s judgment was affirmed as to disgorgement, the civil penalty, and
prejudgment interest, post-judgment interest— which is mandatory and set at a fixed rate by
statute, see Lewis v. Whelan , 99 F.3d 542, 545 (2d Cir. 1996) and 28 U.S.C. § 1961(a) —
continues to accrue on all three amounts and began running on the date the Amended
Judgment and Redetermined Judgment were issued. See Vermont Microsystems, Inc. v.
Autodesk, Inc., 138 F.3d 449, 453 (2d Cir. 1998) (ordering that post- judgment interest and
costs would run on the affirmed portion of the judgment from the date of the judgment’s
entry.)
Defendant and Relief Defendants argue that the Court should infer from the Second
Circuit’s decision to dismiss their appeals of the Court’s liquidation orders as moot that in
fact, both orders are vacated in their entirety and thus no longer serve as meaningful
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ascertainments of judgment for purposes of post- judgment interest. As both the SEC and
Receiver maintain, this is not the case; the Second Circuit explicitly stated “vacatur of the
actual-gains award and application of the nominee doctrine affects the scope of the district
court’s liquidation orders,” Ahmed, 72 F.4th at 410-11 (emphasis added), not that it makes
them a nullity. 3 Defendants also rely on the Second Circuit’s footnote that Defendant
Ahmed’s appeal of the “approach” the Court took to “calculation of post-judgment interest”
in the December 2, 2022 was dismissed as moot to suggest that the liquidation orders are
fully invalidated , including the award of post- judgment interest even on the otherwise
affirmed underlying judgments. Id. at n.11. However, the footnote reflects nothing more than
the fact whether (and which) frozen assets and Receivership assets are included in the total
post-judgment interest calculation will necessarily be re- decided as part of this Court’s
determination of the issues on remand. Finally, the motions for a stay of liquidation pending
appeal were rendered moot because the appeal was no longer pending, having been decided
by the Second Circuit— not because the judgments were completely invalidated.
Thus, the Court finds that the amount which has been affirmed by the Second Circuit
is $103,380,535.06 as of July 21, 2022, with post -judgment interest continuing to accrue on
disgorgement, the civil penalty, and prejudgment interest. When considering the $43 million
that must be reserved for tax payments, that amount leaves a shortfall between the amount
of the judgment and the amount of assets which have thus far been liquidated . Further, a
significant amount of what has been liquidated thus far falls into the category of “assets titled
to Relief Defendants” and “assets jointly titled to Defendant and Relief Defendants,” meaning
3 Ms. Ahmed demonstrates in her response to the SEC’s proposed remand briefing schedule
[Doc. # 2565] that she understands a “vacatur” c an apply to certain issues but not others
without rendering the entire judgment void. (Id. at 2) (arguing that “vacatur” means that “the
Court’s prior ruling as it stands to those issues vacated is not in effect, that it has been
cancelled, or rendered void.”) (emphasis added).
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that if the Court ultimately determines that some of those assets do not fall within the scope
of the nominee doctrine, they could be returned to Relief Defendants, and further assets from
categories 1 and 2 would then require liquidation to satisfy the judgment. Thus, Receiver has
demonstrated that there is good cause to continue liquidating some of the assets while
staying the liquidation of others.
Of the assets in C ategories 1 and 2, three assets in particular warrant further
discussion. Mr. and Ms. Ahmed’s request to stay liquidation of the MetLife life insurance
policy is denied because the Second Circuit determined that the Court’s nominee doctrine
application as to this asset is sound, and thus they do not show a likelihood of success on the
merits in their potential further appellate review.
4 Defendant also challenges the
classification of two assets —the Genworth life insurance policy and the American General
life insurance policy — as Defendant titled assets, claiming that they sho uld instead be
considered Relief Defendant titled assets because they are “not titled to, nor do they belong
to Defendant”; although he is the insured, Defendant maintains that the policies are owned
by an insurance trust of which Ms. Ahmed is the trustee, with Ms. Ahmed and the minor
children as the beneficiaries. (Def.’s Mot. at 3 -4.) Receiver does not object to staying the
liquidation of those two policies pending further investigation of the beneficial ownership of
4 The Court also rejects Mr. and Ms. Ahmed’s request to stay liquidation of the life insurance
policies because they argue that “Connecticut state law bars the use of a life insurance policy
to satisfy a judgment creditor” . If Mr. a nd Ms. Ahmed believe an exemption to liquidation
under Connecticut state law applies, then they must follow the procedure set forth in Conn.
Gen. Stat. § 52 -361(d) to formally claim the exemption, which will also allow Receiver to
respond regarding the applicability of the Connecticut state law exemption for life insurance
policies, including whether the legislation applies retroactively, whether Defendant may
avail himself of the provision as a fugitive, and whether “the purchase, sale, or transfer of the
life insurance policy [was] made with the intent to defraud the creditor ” such that the
exemption would not apply.
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the policies, (Receiver’s Reply to Responses to its Mot. [Doc. # 2587] at 4), and so the Court
grants Defendant’s motion to stay liquidation of those two assets.
The Court thus GRANTS Receiver’s motion for a partial stay of liquidation as to the
assets identified as being in categories (3) and (4) , finding that such a stay will prevent
irreparable injury to the Relief Defendants through the liquidation of unique assets that have
not yet been adjudicated as being subject to disgorgement. Defendant’s motion for a stay is
also GRANTED IN PART as to the Genworth and American General life insurance policies.
However, because Defendant and Relief Defendants present no authority for the proposition
that the Receiver may not continue liquidating assets that belong to Mr. Ahmed, whose
disgorgement obligations have been affirmed, or that have been determined subject to
disgorgement via the nominee doctrine by the Second Circuit, the Court DENIES Defendant’s
motion in all other respects.
5
IT IS SO ORDERED.
__________/s/_______________________________
Janet Bond Arterton, U.S.D.J.
Dated at New Haven, Connecticut this 23rd day of August, 2023
5 Ms. Ahmed’s motion for leave to file sur-reply [Doc. # 2591] reiterates the same arguments
made in her other responses or addresses issues that do not bear on the Court’s decision,
and is thus DENIED for lack of good cause.
Case 3:15-cv-00675-VDO Document 2593 Filed 08/23/23 Page 15 of 15