United States District Court, D. Connecticut
RULING GRANTING DEFENDANT'S MOTION FOR APPELLATE
ATTORNEY FEES
Janet
Bond Arterton, U.S.D.J.
Defendant
moves for the release of funds from the Receivership Estate
for payment of attorneys' fees in connection with appeals
in this case which are currently pending before the Second
Circuit Court of Appeals. (First and Second Mots, for
Appellate Attorneys' Fees [Docs. # 1061, 1288].) The
Relief Defendants consent to Defendant's request. (Rel.
Defs.' Resp. [Doc. # 1292].)
In
support of his request, Defendant argues that the
"[b]alance of equity warrants the release of funds for
counsel's fees" because he "has no legal
training," "needs the guidance and assistance of
qualified counsel," and "would be severely
prejudiced" without such guidance. (First Mot. for Fees
at 2.) Defendant also argues that the release of funds is
appropriate because, he asserts, "significantly more
assets" are frozen than are necessary to satisfy the
judgment against him. (Id.; Second Mot. for Fees at
4.)
Defendant
states that he is "unable to get any counsel to agree to
represent him without the evidence that he will be able to
pay for their services," but "informal discussions
would lead him to believe an amount of $500, 000 . . . would
be sufficient for the Defendant to be able to retain
qualified counsel." (First Mot. for Fees at 3.) Mr.
Ahmed also declines to provide any additional
"unnecessary information," including "who the
Defendant's appellate counsel is and what work they would
do." (Second Mot. for Fees at 5.) He argues that
"[a]nything more" than the knowledge that "the
counsel would present the Defendant's appeal to the
appellate courts" is "protected under
'attorney/client communications' and
'work-product privilege' and it is inequitable (and,
very likely, illegal) for the SEC to even inquire further
about the work that the Defendant's counsel would
do." (Id.)
Daniel
G. Johnson, in his capacity as trustee of the Iftikar A.
Ahmed Family Trust and as the custodian of the UTMA accounts
for the benefit of the Ahmeds' three minor children,
objects to any release of funds which would use "assets
from the trust or the UTMA accounts for the appellate legal
fees" of the Relief Defendants or Defendant. (Johnson
Resp. [Doc. # 12961 ¶ 4.)
Receiver
Jed Horwitt "takes no position with respect to the
release of up to $500, 000 from the Receivership Estate to
pay fees incurred by the Defendant's appellate
counsel." (Receiver Resp. [Doc. # 1294] at 2.) The
Receiver "feels compelled, once again, to correct the
mischaracterization of the Report concerning the existence of
Receivership Assets that are not needed to secure the
Required Amount," explaining that, contrary to
Defendant's assertions, "the ultimate extent of any
Residual Assets, if any, presently remains unknown" and
will remain unknown until assets securing the judgment have
been liquidated. (Id.)
Notwithstanding
that ambiguity as to the existence and amount of any Residual
Assets, the Receiver "does not believe that a
disbursement of up to $500, 000 to Appellate Counsel,"
subject to certain conditions and procedures, would
"adversely impact the Receiver's ability to ...
fully secure the Required Amount through the liquidation of
Receivership Assets." (Id. at 3.)
"Therefore, the Receiver takes no position with respect
to the relief requested by" Defendant's motion.
(Id.) But the Receiver did note that he "may
oppose further distributions until the Required Amount"
has been liquidated, "depending upon the facts and
circumstances presented at that time," in consideration
of the estimated value of the Receivership Estate and the
Residual Assets. (Id. at 4.) The Receiver also urged
the Court to impose conditions upon any release of funds
which mirror the conditions placed by the Court on the
release of funds to pay Relief Defendants' appellate
counsel. (See Id. at 5 (citing Ruling Grating Rel.
Defs.' Appellate Fees [Doc. # 1267] at 4).)
The SEC
opposes Defendant's motion for several reasons. (SEC Opp.
[Doc. # 1291].) First, the SEC argues that Mr. Ahmed's
"claimed predicament - to be without access to funds
because of the continued asset freeze - is entirely of his
own making" because he "fled the United States,
repeatedly sought to violate this Court's ordered asset
freeze, and remains a fugitive." (Id. at 3
(internal citation omitted).) The SEC also argues that
Defendant is responsible for his current lack of access to
funds, because he urged the Court to continue the asset
freeze after judgment entered against him, contrary to the
SEC's request to liquidate assets sufficient to satisfy
the judgment and release any remaining assets, which could
then have been used to pay attorneys' fees. (Id.
at 3-4.) Second, the SEC argues that Defendant's motion
should be denied because he "has not shown that he
depends on the release of funds to hire appellate
counsel" and because, the SEC suggests, the
circumstances of Mr. Ahmed's life in India suggest some
current access to funds. (Id. at 4.) The SEC also
points out that neither it "nor the Court has any way to
sufficiently verify that the Defendant depends on the release
of funds to hire counsel, since the Defendant has fled the
jurisdiction and remains a fugitive" and thus cannot be
questioned under oath or held accountable for violating any
order of the Court. (Id. at 4-5.) Third, the SEC
notes that "unlike Relief Defendants, the Defendant is
permitted to proceed pro se in any appeal in this
case" and thus does not require representation by
counsel. (Id. at 5-6.) Fourth, the SEC argues that
because Relief Defendants have retained appellate counsel and
"have essentially litigated this case on behalf of the
Defendant," Mr. Ahmed himself does not particularly need
his own counsel. (Id. at 6.) Fifth, the SEC objects
to the "vague and excessive" nature of
Defendant's request. (Id.)
Several
key changes have occurred since Defendant's earlier
motions for the release of funds to retain counsel, (see,
e.g., Mot. to Modify Asset Freeze [Doc. # 95]; Mot. for
Reconsideration to Modify the Asset Freeze [Doc. # 325]).
First, the amount of the judgment against Mr. Ahmed has now
been determined. (See Amended Final Judgment [Doc. #
1054].) Second, the Receiver has provided to the Court a
neutral accounting of the assets of the Receivership Estate,
which indicates that some Residual Assets will likely remain
after assets are liquidated to satisfy the judgment.
(See Report of Receiver [Doc. # 1130].) Third, in
light of the stays granted by this Court and the Second
Circuit Court of Appeals pending the decision of the Supreme
Court in Liu v. SEC, No. 18-1501, that liquidation,
and the subsequent release of any Residual Assets which might
have been used to pay attorneys' fees, has been
significantly delayed. (See Orders Granting Stays
[Docs. ## 1339, 1346].)
It may
be true that Defendant's claimed lack of access to
counsel is, in part, a situation of his own making, given his
decision to flee this jurisdiction and his continued
opposition to proposals to liquidate assets sufficient to
secure the judgment amount, after which any remaining assets
could be released and used to retain counsel without the need
for the Court's approval. But the Court disagrees with
the SEC's suggestion that those choices should prevent
Defendant from accessing funds which the Receiver expects
will likely not be necessary to satisfy the judgment and thus
would eventually be released. And although the
Defendant's and Relief Defendants' interests in this
case often overlap, the Court cannot say that Mr. Ahmed is
not entitled to retain counsel simply because Relief
Defendants have done so. The Courl also recognizes that the
appellate process in this case may benefit from the
participation of counsel on behalf of Mr. Ahmed.
Thus
Defendant's Motions for Appellate Attorneys' Fees
[Docs. # 1061, 1288] will be granted with modification. The
SEC, Mr. Johnson, and the Receiver raise legitimate concerns
about the nature and scope of Defendant's current
request. Therefore no funds will be released at this time,
and any release of funds from the asset freeze to pay
appellate counsel retained by Mr. Ahmed will be subject to
certain conditions.
First,
Defendant shall notify the court within twenty-one days of
retaining appellate counsel. That notice shall include the
name of counsel retained by Mr. Ahmed and an estimate by that
counsel of the cost of pursuing Mr. Ahmed's appeals
before the Second Circuit.
Second,
invoices for such representation shall be submitted to this
Court for approval, and no funds shall be released by the
Receiver absent such approval. Any invoice submitted for the
Court's approval shall be accompanied by documentation of
Defendant's inability to pay counsel absent release of
funds from the Receivership Estate, including a detailed,
sworn affidavit from Mr. Ahmed demonstrating his inability to
pay the fees. Any request for the release of funds which does
not comply fully with this requirement will not be approved
by this Court. Upon approval by the Court of any such
invoice, the Receiver shall determine which assets of the
Receivership Estate should be used to pay that invoice and
shall inform the Court and the parties of his determination,
but no funds from the Iftikar A. Ahmed Family Trust or the
UTMA accounts shall be used for this purpose.
This
authorization shall terminate once the judgment is secured in
the CRIS account, and residual assets, if any, have been
released from the asset freeze. This authorization also shall
terminate should the Court determine that the value of the
assets of the Receivership Estate has changed such that the
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