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Amerivest Financial, LLC v. Malouf

Court of Appeals of Oregon

June 4, 2014

AMERIVEST FINANCIAL, LLC, Plaintiff-Appellant, Cross-Respondent,
v.
LEWIS P. MALOUF; and CHARLES FINANCIAL, LLP, Defendants, And DANIEL DIRK CODDINGTON; GOLDEN SUMMIT INVESTORS GROUP, LTD; MICHAEL SCOTT MOONEY; and FOUNTAINHEAD FUNDING CORPORATION, Defendants-Respondents, And PACIFIC NORTHWEST TITLE AND ESCROW COMPANY; ROBERT TAUROSA; IDEAL SETTLEMENTS; and MICHAEL A. AMATO, Defendants-Respondents, Cross-Appellants

Argued and Submitted October 12, 2012

Multnomah County Circuit Court. 080201987. Henry Kantor, Judge.

Peter Hawkes argued the cause for appellant-cross-respondent. On the briefs were Thomas W. Sondag and Lane Powell PC.

Timothy R. Volpert argued the cause for respondent-cross-appellant Pacific Northwest Title and Escrow Company. With him on the answering-cross-opening brief was Davis Wright Tremaine LLP. On the joint reply brief on cross-appeal were Timothy R. Volpert and Davis Wright Tremaine LLP, and Wendy M. Margolis and Cosgrave Vergeer Kester LLP.

Thomas W. Brown argued the cause for respondents-cross-appellants Robert Taurosa, Ideal Settlements, and Michael A. Amato. With him on the answering-cross-opening brief were Wendy M. Margolis and Cosgrave Vergeer Kester LLP. On the joint reply brief on cross-appeal were Timothy R. Volpert and Davis Wright Tremaine LLP, and Wendy M. Margolis and Cosgrave Vergeer Kester LLP.

Michael Scott Mooney and Daniel Dirk Coddington filed the joint brief Pro se.

Robert S. Banks Jr., and Banks Law Office, P.C., filed the brief amicus curiae for North American Securities Administrators Association, Inc.

No appearance for respondent Golden Summit Investors Group, Ltd.

No appearance for respondent Fountainhead Funding Corporation.

Before Armstrong, Presiding Judge, and Duncan, Judge, and Brewer, Judge pro tempore.

OPINION

Page 740

[263 Or.App. 329] ARMSTRONG, P. J.

Amerivest Financial, LLC, appeals a general judgment for defendants that the court entered after a jury trial. Amerivest assigns error to the trial court's rulings on cross-motions for summary judgment, in which the court concluded that neither an investment program nor individual senior life policy settlements constituted investment contracts and, therefore, were not securities under Oregon law. Amerivest also assigns error to the admission into evidence of a deposition transcript, which allowed the jury to learn of multiple instances in which the managing member of Amerivest invoked his Fifth Amendment privilege against self-incrimination.[1] On review of cross-motions for summary judgment, we consider whether there are any disputed issues of material fact and whether either party is entitled to judgment as a matter of law. Vision Realty, Inc. v. Kohler, 214 Or.App. 220, 222, 164 P.3d 330 (2007). For the reasons that follow, we affirm.

Amerivest is a financial-services limited liability company formed under Colorado law and managed at all pertinent times by D. William Thomas.[2] In autumn 2005, Thomas was introduced to Lewis Malouf by a mutual acquaintance. Following their introduction, Malouf and Thomas discussed an investment program involving senior life policy settlements (SLPs), and, in December 2005, Malouf sent Thomas a summary that outlined the terms and procedures of a " managed buy/sell transaction" involving SLPs " based on the use of cash funds in [263 Or.App. 330] the minimum amount" of $10 million.[3] (Capitalization altered.)[4]

Page 741

As to the terms, the summary described a " transaction" in which Amerivest would deposit $10 million into an escrow account. Subsequently, Malouf would " issue and exit" SLPs to " exit buyers." Before each " exit," the exit buyer's funds would be deposited in the escrow account, " assuring that the exit buyer [was] fully in place and contracted." According to the summary, Amerivest would earn 11 percent of the total cash funds in the escrow account as net profits with each " tranche" --that is, each group of SLPs bought and sold. Malouf was to conduct 200 " tranches" per year, and, based on those figures, the summary estimated a $220 million net profit for Amerivest over the course of one year, assuming that Amerivest's earnings did not compound. Malouf was to retain any remaining profits, less one percent paid to brokers.

As to the procedures, the summary provided the following: Amerivest would issue a corporate resolution, authorizing Malouf to conduct the transaction, disperse Amerivest's funds, and act as a signatory for Amerivest, as well as issue a " trading authority document" that would give Malouf the authority to " transact the actual buy/sell." At the same time, Malouf and Amerivest would enter into a " Cooperation and Profit Allocation Agreement," finalizing the terms of the arrangement. Malouf would then " cause the escrow company" to issue a letter identifying itself ...


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