it please the court my name is eugene killian i'm here on behalf of defendant appellant d n d trust we've reserved two minutes in july two thousand and five kenneth kerry gave solomon dweck fourteen million dollars in personal funds mr what was his nephew and business associate was not the first time that mr carey had given mr dweck enormous sums of money in fact within the previous month you given mr another fourteen million dollars right as did your president care eri you're never going to have a diff a party obviously come or really are going to have judgment a party come up and say i committed fraud i didn't ask that i has or you have to is the reason to believe that it is fraudulent no i didn't ask for evidence that he had  it was fraudulent i understand he as you say that would not be likely so there are series of red flags that i believe need to be considered first of all the loan documents themselves have problems inherent in them that were noted by judge sand earlier in this case in denying summary judgment for example the two most loan documents incorporate a control agreement that does not exist now you may say that only goes to perfection but i think but i think it goes otherwise i think a rational jury could look at that and say this is such a major component of this deal and mr carey is such an experience businessman that he would not have allowed this transaction to happen if he didn't have the control over it would be in it for mr kerry to participate in a transaction in which he is providing money to someone in exchange for a share of profits to come in a transaction where the the essence of what makes it fraudulent is there is no building to buy there are no profits to come and mr grech is about to go crash in his ponzi scheme what does mr kerry get out of this other than losing his fourteen million dollars he had  track record of getting enormous sums of money from mr dulac and i believe mr judge lynch that you need to look at what happened after december two thousand and five and i think a reasonable juror would look at what happened after december two thousand and five and what would we find when we looked at that you would find that mr kerry says he did not know until december two thousand and five that this transaction was fictitious he knew by december that he had been defrauded out of fourteen million dollars that's what he said in january he gives another five point one million dollars to mr dulac in april two thousand and six he's in the go shooting to give mr another twenty five million dollars to buy a golf course in new jersey these are not things that someone would do if they felt they had been defrauded in december he's giving enormous sums of money to mr dweck and he's getting enormous sums of money back and this money is not going to his company seven hundred thousand dollars in february go into mr kerry's pocket five million dollars in march two point two million dollars in funds that mr stole from p and c go directly to mr kerry none of this goes through kay l c c another one point eight million dollars at the end of april two thousand and six so a rational finder of fact could look at this totality of circumstances and determine that based on all of these red flags mr kerry was not a victim he was a perpetrator and the this deal this fictitious deal was known to be fictitious from the beginning how is it going to help to participate in this frog putting in fourteen million dollars he's concerned because he thought he was going to continue to receive enormous returns as he had in the past and his money came into him in two thousand and six and why would he then demand this pledge of securities as collateral for this transaction other than because it's the same reason anyone would who is lending money to someone else that there's some question as to whether it will come back maybe hopes i assume get money otherwise he wouldn't have entered the deal at all well it's interesting judge lynch that you say he got the pledge if you look at the loan agreements the pledge is supposed to be to cayle c c right mikail c c s person get the pledge if you look at the loan documents pages one seventy four and one eighty six of the appendix they are not signed by calle c c they are unsigned every other loan doc and in this case our loan documents and the the previous pledge agreement that was extinguished by repayment of a debt in june are awfully signed this one is not signed and it's a major component of the deal in your documents as well there are so it seems it was sloppy paperwork and mr sharp is giving money to mr dweck out of the bank all through the ponzi scheme there is no indication that anything mr scharf did was fraudulent and to suggest that is just wrong your honor i'm sorry it's been gone over he when he realized there was a problem he paid the loan off with his personal funds it was gone over by the federal authorities there was no indication that he ever did anything fraudulent in fact he got money out of the bankruptcy whereas mr carey had to pay money to the bankruptcy trustee so that's just not correct i'm sorry  was provided in february two thousand and six that was meant to be schedule a and to federal judges in new jersey held that judge ferguson in bankruptcy court affirmed by judge to santo in the district court that that was enough to create an issue of fact on that to go to a jury i  saying that we have don't have problems with our documents i'm just saying a jury should look at this and assess the credibility of mr scharf mr dulac and mr carey and determine who's telling the truth you also have the delay in collecting the loan if the loan documents are correct k l c c was due to be repaid in september two thousand and five they did nothing the payment was not made fourteen million dollars plus an additional profit on top of it was not made in september two thousand  in fact they did nothing to try to collect the money until april two thousand and six that was the first time they ever tried to get a hold of the stock account they interfered with the transfer to us in february but they took no affirmative steps to take possession until april and that is something that a jury could look at and say if this was a real deal if this was not a fictitious arrangement from the beginning then there would have been steps taken to collect that stock as soon as this this loan went into default you also have this question of journal entries i asked mr carey at deposition do you have any evidence that you advanced this fourteen million dollars on behalf of k l c c as opposed to trading on your own account and getting money on your own account he said he had no loan documents at all he had journal entries el sisi is his family and he made great he went to great lengths to say it wasn't and it was not his alter ego was an arm's length with other officers it doesn't matter does it where the consideration com no it matters why the consideration was paid if it was not paid in connection with the real estate deal it was paid on mr kerry's own account that creates an issue in a juror's mind when you have a living document that says we're lending you two million dollars kerry provides fourteen million dollars the pledges then made to cayle c c why is it again that we are thinking that this fourteen million dollars was not in connection with that transaction because he has a history of making direct personal payments to mr dweck in exchange for payments back from mr direct was conducting a ponzi scheme at the time and you don't have running documents your honor they're not countersigned by calle c c and these are all things that a jury could look at in san have problems with this if i may just take ten seconds on the on the fees issue unless there's another question on that issue and it's ok the law on the circuits clear the payment was supposed to come out of the into pleaded funds it was not supposed to come from us you can look at september tide you can look at the his all the case we said it in our brief there is and he says a little unclear but it also says ultimately it should be charge of the losing languages in  only issue before the court relating to my client is the attorneys fees issue and with respect to that there is only one issue that has been raised by any party with an appeal head that is making an appeal and that is not the amount of the attorney's fees or the right to attorneys fees but only who should have paid them citi group is now as it has always been indifferent to who pays its attorneys fees but just asks th paid that has become a slightly more complicated issue as far as citi group can tell because the funds that were effectively deposited in court they weren't actually deposited they were controlled by the court in an investment account what what is the rule i mean the globe indemnity case is a little unclear i mean in one sentence it says usually we we take it out of the in a plea to funds but then in another sense it's but ultimately the losing party should pay ops and special circumstances what is what is the rule how do you fly if you are as i say might my client is indifferent but my reading of the rule is that the interplay o plaintiff initially gets the funds from the firm the into pleated stink so that the interplay did plaintiff is not put to additional cost and trouble trying to recover its its costs and  say your position is you should already have that money because it should have been paid out of the fun whether or not there is then a judgment entered in favor of k l c against  we understand there is a law you know however that the court did it we're fine with that as long as we get paid but that is our understanding of the law you know when you say you don't take a position that i'm a little unclear and after all you have not been paid in my right i mean that's correct and what you have in the order that was presented is a judgment against d n d for that amount that's correct and that is less advantageous to you than an order that directed that the money on whether there should be such a second judgment you don't care whether k l c c recovers against the indy but it sounds to me like you're also saying you take no position really on whether the law is that you should get paid in the first instance but in the sense that d n d has argued that we limited our application for attorney's fees which we did not we were asked by the district court our understanding of what the law was on who should pay and it's as i said and frankly as you know i guess i just don't understand what you are asking us to do or not do have you filed any kind of cross appeal we did not so we can only defend the judgment below ok once been released they have been released and that's the problem you need to get the money back from one of the other that's correct and you don't care as long as we get it we don't care well you know here but suppose we were to agree for example with the district court that ultimately the money should come from d n d on the other hand if the funds have already been released to calle c c what what kind of outcome would result in you being in a better position in this case if this court affirms the court below on the substantive issue of who is entitle ultimately to the to the into pleated state then it should also affirm the payment by doing indeed because the funds no longer existing they would get there if this court should go the other way and reverse then seems to me it probably logically follows that the who should pay has to be reversed as well because the the rationale in the court below was that it was d and b if we were to reverse the judgment of vacate the judgement as requested by the only party that has filed an appeal you're right the issue of attorney's fees would become moot because the case goes on no your honor when in an i see so there is not as you understand the appeal it relates only to ownership of the fund and neither side is pressing any counter claim again across claims against you at this point that's correct ok so in that event then the issue of attorney's fees would be ripe your position to be resolved because you're no longer in the case you're dismissed from the case that's correct you got it and you're on  but but specify that it is only as to if if if it comes to that it is only as to who pays and not the amount or the right to attorney's fees thank you your hon believe the rule stated in globe indemnity is is the better one and ultimately the rule should be that the losing claimant absent special circumstances should be taxed with the fees and claimant for those fees or whether citi group is charged with with the collection efforts as to d n d trust the important point is under either scenario the losing claimant bears responsibility for those fees in fact that the cases that cited in the briefing where where the court took the fees out of the interplay did funds in most of those cases it's unclear it's either unclear what happened with respect to the losing claimant or the court affirmatively states that the fund the fees will be paid out of the enter pleated funds as a matter of convenience and that the losing claimant shall replenish the fund so that the winning claimant doesn't suffer the burden of pay i believe that's the executed profit participation agreement and j a six forty eight through fifty seven which follows immediately thereafter the joint appendix is the july eighteenth two thousand and five pledge and security agreement is first in someone's file  but that's the profit participation agreement you're on or the i believe the pledge and security agreement is is signed unless i'm mistaken that six forty three fifty seven but additionally i don't believe the signature is is of import because the parties reiterate this issue was never raised before the trial court and there's never been any question that that these documents were authentic and that the parties calle c c and wecht proceeded under under the under these agreements and if that's an issue for reversal then we also need to look at and point banks on documents where they purport to attach a security interest in collateral with a blank schedule a with all the other loan documents referring to an investment account at brown and company  so at most my i see my time's expired on or for i could finish the thought at most we have a wire transfer with a reference to the fifty four broad street transaction which is the property that's identified in the profit participation agreement and corresponds with the date of the pledge agreement that specifically identifies the collateral at issue here that happens in july two thousand and five with amber was documents which purport to give and interest in an investment account of brown and company that indisputably never had the assets in question here thank you thank you for the don't i just i just think this is a situation where you can't look respectfully at a couple of paragraphs and unsigned documents without looking at the totality of the circumstances in the pattern of the business that was this issue raised below that i believe was race executed  record i believe it was raised before judge sand and i think when he dropped that footnote he said there are a lot of inconsistency is in the loan documents i think that was one of them but i can't point to a specific page right the second and i just want to close with globe ind that the stakeholder is entitle to be a war cost in attorney's fees but quote these are generally awarded against the enter pleader fund but may in the discretion of the court be taxed against one of the parties when their conduct justifies that  c ever said we should pay it they were arguing about the amount and if you look at the one i checked that so the question is what you know well ok if it were the case that  c made an application to the district court that the fees should be awarded against you something that you acknowledge even under the more recent second circuit opinion the district court could do it's discretion and you did not contest that would that not be a waiver i don't think anybody made a motion against us judge i don't think anybody asked that we paid his district court direct both of you to respond to the motion the district court said i'd like views from the parties as to how the fee should be paid but then city looting views from from d n d but citi group moved to paid for payment from the account and if you don't believe that the order that they submitted to the court says that the order they submitted to the court says it should be paid out of the account i can't respond to motions that were made against me i'm supposed to imagine what they would say if they were made i don't think you'll see she did argue that we should pay a low i could be wrong but i i  don't think they did thank you