well here the first case in calendar trustees upstate new york engineers versus i v s good morning please the court my name is lewis malone and i'm here this morning on behalf of the trustees of the upstate new york engineers pension fund seeking the reversal of the district court's determination to dismiss our first amended complaint on the grounds that we failed to state a cause of action under federal rules of procedure six as well as that we lacked article three standing to pursue our claim we believe that under the appropriate standards for article three standing as well as rule twenty six our complaint does state a cause of action and it was error for the district court to have dismissed it i would like to start by saying what this case is not about this case is not about seeking any recovery from the maid office state and is not about seeking to recoup losses in a manner that would or could negatively impact any other made off investor who originally seek the million decided not to share that it was a ponzi scheme or fraud correct your honor there is in this record it is quite clear that ivy did not know that it was a ponzi scheme or a fraud if you remained in this did it to some degree any ivy remained invested in it until the year two thousand and your client was advised to thin out not to annoy you as much on that our client was never told ivy's concerns concerning made off i didn't say that i'm sorry funding policy that we had adopted when in one nine hundred ninety eight i v informed us actually in one nine hundred ninety nine i v informed us that it would be appropriate to have up to fifteen percent of our assets in one investment  opposed to what did you have it made before it was under fifteen percent and so what would the trustees did as they adopted a policy change i'm sorry just let me confirm made money is irrelevant for purposes of determine whether or not there is loss the absolute question is whether or not we could have made more money by removing the made off investment and putting it into a prudent alternative investment if you would if you had done that then that's exactly the situation you said would not have existed this case is not about if you would done that then all the other people who invested with madoff they would have been damaged to the extent that you  had a contract with made off and then they were able to enforce that contract and to create what that with this court called a enforceable securities in title meant and furthermore this court determined that the proceeds that would  come from that contract were settlement payments as that term is defined in the bankruptcy code the district court determined that we had no article three standing in our i just ask a follow up on judge or yes your honor but we had a right to that money we have a we have just your how you have a right to money that's just on them from other people because in blue mist too they said we have a contract we have a right to enforce our contract we have a right to secure the securities obligations and we have a right to obtain settlement payments and as the court limits too said even if those settlement payments came from some other source even if they were stolen from somebody else what you could have made we allege your honor that we would have made more but that you have any evidence of that well your honor we the evidence is that we would have taken thirty six million dollars in one nine hundred ninety eight and invested it in  prudent alternative investment which would seem to me self evident that we would do better than thirty three million dollars which we took over time if you keep in mind that the fact is that we were investing from one nine hundred ninety eight through whenever when the market went up down and around and at at the at the pleading stage your honor i don't believe we have to state the exact amount of money that we would have made we have to allege facts loss yes your honor and the loss is the difference the difference between what we could have made and what we did make and we allege that we could have made more in the market that is the definition of los what you call your right to the money is really just the ability to hold onto stolen funds and with your client completely innocent right to hold on to stolen funds by virtue of the statute of limitations which is really just a procedural device seeking finality rather than as with made off if we enforce that contract creates a in forcible securities in title and that is a legally protected interest for purposes of article three standing and the proceeds from that contract become settlement payments which we are allowed to hold onto you and you said earlier i think in response judge who's question you you  you prevailed in the clear back action by virtue of the statute of limitation we did not have to pay that money back that is correct you prevailed and by virtue of the statute of limitations yes otherwise you would have had to pay back long because you had no limitations that really doesn't establish that you have a right to that surely your honor if we have a contract that we can enforce that's a legally protected interest i understand that's legally protected but has to be interpreted broadly in the purpose of a receipt is to put us back into the position we would have been but for the breach but for the breach we would have taken that money out and if there was some consequence later down the road for taking that money out that can't change the decision that was made and you have to make the decision and you have to evaluate the decision on the basis of what was known in one nine hundred ninety eight you know the returns from this investment were inflated because they were all phony right and then went up in excess no matter what the market had and i don't think you just what your alternative strategy would have produced that's what the missing piece you said what you are but you didn't say what you would have earned if you put it someplace that wasn't based on fraud well we say your honor we would have put it into a prudent alternative investment and what would that have produced in that period we say it would have been greater than what we earned and what we urge honor is the money we took out of made off plus whatever earnings we got on that money because we in some respects we reinvested that money in other respects we use it to pay benefits so our allegation is that if we had put this money in a prudent alternative investment do you have any did you are you saying you don't have to at this stage of the pleading to give any idea what that investment would have that's correct your hon because i think that it's a matter for discovery i think that's a matter that that comes down where you have to accept as true are allegations but you have to show a loss to proceed and you haven't met that tast your  i believe we have because we have alleged that we would have made more on our alternative prudent investment i don't think we have to at this stage of the proceeding identify what their put an alternative vessel would have been is it true that you made about thirty three million dollars profit after morning morning your honour's may please the court my name is lewis lymon i represent i v bank of new york and the other defendants in this case your honour's the underlying question in this case is whether the presumption that had they in one thousand nine hundred ninety eight sought to recover the fake stated amounts in the accounts they would have been entitled to that amounts of money found that investment like this which always went up exactly right your honor just to give you some of the numbers the principal melds in one thousand nine hundred ninety eight that they had invested was five point seven million dollars by december seven years later by two thousand and five they had withdrawn thirty eight point seven million dollars you know listening to the two of you is like looking prediction predictability then you have the opportunity to withdraw thirty six million dollars in one thousand nine hundred eight and of money doubles every year with proven in every seven years with proven investments it seems pretty clear that they could make a lot more than that and if they and we accept the fact that that your client breached a fiduciary duty to tell them to to to run and don't stop  then they they would have gotten more money and they would have been able to resist a claw back to some degree and so they would have been they would have had more money for their for their members your honor it that's right for two independent reasons the first reason has to do with legal entitlement and the other reason has to do with sort of a factual but four words so we talk about each of them separately with respect to legal entitlement my adversary importantly that that u c c provision doesn't give one entitle me and two the proceeds from fake account statements that use the correct names of securities any more than it would give them the right to fall fictitious profits if they had just slightly altered the names made often slightly altered the names of the security side of i b m say series series three and the underlying reason why the court rejected that proposition i submit is the notion that it will not make itself  accomplice to a fraud by essentially validating fictitious statements that are used as an instrument of the fraud if your client pays damages in this case nobody gets  told them to keep it to fifteen percent they actually in fact reduced their investment by over time to keep within fifteen percent they say we should have told them take out that thirty six million ha we done that at the time for two reasons they would not have been in titles had we satisfied our duty they would not have been entitle to the thirty six million first of all the case law is clear second point sort of departs from the language maybe specifically of right but also talks about what the they would have this court do they say well we engineers didn't well i don't think you can create in a receipt claim that easily for this reason because the underlying facts are that it was a ponzi scheme and if they had brought a unwittingly maybe to fraud then they wouldn't have been entitle to those fictitious profits made officer we knew that he was executing a fraud it doesn't really in the end of the day matter that you know we it's they can't avoid it by the contrivance of just pleading out of it but ultimately it doesn't matter what they particularly knew because to hold that they could have gotten that money out means that is to say hundred ninety eight they would have had they gone to court been able to get that money and if you say that that that means in turn that the court would have been made a u dollars and when when the whole thing went poof and and they became insolvent and the people asked their pensions you're on it that actually is the case of the people who with whom we settled and where there who suffered a loss there were people who suffered losses as a result of the but what they said was the i v breach of duty and  that loss would have been a loss of something that they had no right to anyway except to the extent of their investment credit correct the loss is their right to their principle that  is the the last now one of the other hand your clients providing investment advice people to put on an invest and pay fees to your client in order to get the money back that they put it well you're you're under they they  risk passed it of a a loss now these folks didn't suffer a loss but for people who did suffer a loss my clients suffered the the consequence of it i do want to just if i can have fifteen more seconds i i also want to two minute there there are two points that i wanted to address that my adversary mentioned first of all he says well it's different because we're suing ivy then if we were soon made off and i think that's not true with respect to the the plaintiffs are not saying that they and i think they cannot say that had they put their principle in the bit at the beginning in some alternative investment they would have made more than what they made off of saying that they are entitled to what had they got in those fictitious profits they could have made had they put that money in another investment they can say that they just lost thirty six million dollars and that's what they're out of pocket because they got back thirty eight million dollars and there is no case that we're aware of that either says you know but for world that you get  fictitious profits from a ponzi scheme there's also no case that we're aware of that says that you get as alternative investment profits not the money you could have made with your money but in the arista context you must look at what was known in one thousand nine hundred ninety eight mr lyman's argument only makes sense if you take knowledge that is known today and apply it to decisions that made us was running a ponzi scheme if we had sued to get our money we probably would have collette we probably would have won for a town halls game earlier i'm not sure that's true at all your honor there's absolutely no evidence in the record to of their other investors took money indeed some of ivy's own clients on ivy's advice subsequent to the the the purchase of boney by boney of ivy took money out because ivy told them ivy told them what they say they what we say they should have told us in one nine hundred ninety eight and those people i'm sure got their money invested it in main whatever they made on their money other investors in are with respect to the made off investment only we paid a performance fee directed only at the made off investment so clearly if we had been out in one thousand nine hundred ninety eight my impression is you're seeking from the bank of new york which we didn't charge with the fact that you raised the pension payments based on these profits because that seems to me a little beyond  corrector and our point is if we had been told the truth we want to raise the investments we would have raised the pension rate i think that's a bridge too far well that's a personal thank you  y duty and places plan assets at risk for their own benefit and they profit from that experience arista requires the breaching fiduciary to discourse those profits and how is it for their own benefit i'm sorry say again place was it for their own benefit benefit you or you said that if somebody breaches of fiduciary duty for their own benefit well we know that ivy the reason why ivy did not tell us what they should have told us in one nine hundred ninety eight was so they could retain their assets under management in the fees that those generated what makes you think that if they gave you advice we what's what would support an inference that if if your client was advised to go out of this investment made off and given some other investment general motors that they would not have continued to to to  thank you thank you book will reserve decision