Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_09-cv-02079/USCOURTS-cand-3_09-cv-02079-91/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1332 Diversity-Other Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ANITA HUNTER, et al.,

Plaintiffs,

v.

CITIBANK, N.A., et al.,

Defendants.

Case No. 09-cv-02079-JCS 

ORDER PROVIDING INSTRUCTION 

RE: DISTRIBUTION OF FUNDS TO 

ASSIGNORS OR ASSIGNEES OF 

BANKRUPTCY CLAIMS

Re: Dkt. No. 629

I. INTRODUCTION

On December 18, 2015, Plaintiffs filed a motion seeking: 1) instructions regarding the 

distribution of settlement funds as to certain claimants (Sam L. Braswell, Steven Schoenfeld and 

Sandra Stroud, hereinafter “Claimants”); and 2) modification of the “Boulder Settlement.” On 

March 14, 2016, the undersigned granted Plaintiffs’ request to modify the Boulder Settlement but 

deferred ruling on the first issue, relating to the assignment of certain claims, to allow for briefing 

on the question. The Court has now received briefs from Claimants Sam Braswell and Sandra 

Stroud, as well as from the purported assignee of their claims in this action, ASM Capital, L.P. 

and ASM Capital III, L.P. (collectively, “ASM” or “ASM Capital”). In the settlement agreements, 

the Court retained jurisdiction and the parties (including the Claimants, who were members of the 

class) stipulated that the administration and enforcement of the settlement agreements could be 

handled by Magistrate Judge Spero. See, e.g., Docket No. 608. To the extent that assignees of 

claims are included in the settlement class, ASM is bound by the ongoing jurisdiction of the 

undersigned to resolve the issue relating to the assignments if the Claimants’ claims in this action 

have been assigned to it. In addition, ASM has filed a consent to the jurisdiction of the 

undersigned magistrate judge pursuant to 28 U.S.C. § 636(c). See Docket No. 642. Therefore, the 

Case 3:09-cv-02079-JCS Document 646 Filed 03/25/16 Page 1 of 8
2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Court may decide the question of whether the claims of Sam L. Braswell and Sandra Stroud in this 

action have been assigned to ASM.1 For the reasons discussed below, the Court finds that they 

have and therefore, that payments under the settlement to which Stroud and Braswell would have 

been entitled should be made directly to ASM.

II. BACKGROUND

The claims in this action were asserted on behalf of a class (“the Class Plaintiffs”) of 

approximately 400 individuals who lost money (“Exchange Funds”) they deposited with certain 

Qualified Intermediaries (“QIs”) in the business of facilitating exchanges of like-kind property 

pursuant to Internal Revenue Code 1031. The Class Plaintiffs lost their Exchange Funds as the 

result of a Ponzi scheme orchestrated by Edward H. Okun, who, with the help of others, acquired 

several QIs, which were held under the name The 1031 Tax Group, LLC (“1031 Tax Group”). 

The Class Plaintiffs deposited funds with the 1031 Tax Group QIs but were unable to complete 

their exchanges because the funds had been misappropriated, causing over $150,000,000 in 

damages. Stroud and Braswell were class members who lost exchange funds, with claim amounts 

of $54,363.69 and $51,959.97, respectively. See Docket No. 629 at 5. The Class Plaintiffs 

eventually settled their claims in a series of class settlements.

In the meantime, Okun was convicted of several counts of wire fraud, money laundering 

and conspiracy to commit those offenses, and was ordered to pay restitution to his victims in an 

action the United States District Court for the Eastern District of Virginia (“the Criminal Case”). 

See Docket No. 637, Ex. A (Aug. 27, 2009 order in United States v. Okun, 09-cr-00132-REP, 

United States District Court for the Eastern District of Virginia) (“Virginia Order”) at 1. In 

addition, the 1031 Tax Group initiated Chapter 11 bankruptcy proceedings in the United States 

Bankruptcy Court for the Southern District of New York, Case No. 07-11448 (“the Bankruptcy 

 

1

Steven Schoenfeld, like Stroud and Braswell, was notified of Plaintiffs’ pending request for 

instructions and given an opportunity to file a brief addressing whether his claim in this action was 

assigned to ASM. Because he did not appear, the Court concludes that he does not contest ASM’s 

assertion that his claim in this action have been assigned to ASM and therefore, payments should 

be made directly to ASM rather than Schoenfeld. The Court also notes that the language of the 

assignment signed by Schoenfeld, which is similar to the language in the assignments by Stroud 

and Braswell, supports this conclusion. 

Case 3:09-cv-02079-JCS Document 646 Filed 03/25/16 Page 2 of 8
3

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Case”). 

When “the collapse of Okun’s empire became apparent, a significant minority of 

exchangers sold all or part of their bankruptcy claims against Okun and/or Okun’s companies to 

various claim aggregators, who paid a discounted price for those claims.” Virginia Order at 3. 

Stroud and Braswell were among these individuals, entering into assignment agreements with 

ASM Capital.

The Stroud assignment (“Stroud Assignment”) states, in part, as follows:

Assignment of Claim. Stroud, Sandra (hereinafter “Seller”) with 

principal address of 7036 Fallbrook Ct, New Port Richey, FL 34652, 

for good and valuable consideration in the sum of XXXX (the 

“Purchase Price”), does hereby absolutely and unconditionally sell, 

convey, and transfer to ASM Capital, which includes ASM Capital, 

L.P., ASM Capital III, L.P., ASM Offshore Limited, and any of its 

successors, assigns or designees (hereinafter “Purchaser”) all of 

Seller’s right, title, benefit and interest in and to any and all of 

Seller’s prepetition claim or claims, as more specifically set forth as 

any right to payment (the “Claim”), against The 1031 Tax Group 

(the “Debtor”), in bankruptcy proceedings in the United States 

Bankruptcy Court for the Southern District of New York (the 

“Court”), Case No. 07-11448 (the “Case”); and includes any Proof 

of Claim (defined below), along with voting and any other rights 

and benefits which may now exist, or come into existence in regards 

the Claim, all cash, securities, instruments and other property, to be 

paid or issued by Debtor or any other party, directly or indirectly, in 

connection with or satisfaction of the Claim, including without 

limitation “cure” amounts related to the assumption of the executor 

contract an any rights to receive all payments in respect thereof, and 

all rights to received interest, penalties, fees, and any damages from 

any cause of action, litigation or rights of any nature against Debtor, 

its affiliates, any guarantor or other third party, which may be paid 

or issued with respect to and/or in satisfaction of the Claim (the 

“Recovery”). This Claim Purchase Agreement (the “Agreement”) 

shall be deeded an unconditional purchase of the Claim for the 

purpose of collection and shall not be deemed to create a security 

interest. Seller represents the Claim is in an amount not less than 

$54,363.89 (the “Claim Amount”).

Denver Decl., Ex. 3. In a section entitled “Miscellaneous,” the Assignment states that “[t]he 

parties hereby mutually agree that this Assignment is the result of negotiations between the parties 

and terms hereof are negotiated terms. Accordingly, any rules of interpretation, construction, or 

resolving ambiguity against the drafter that otherwise apply, shall not apply hereto.” Id.

The Braswell assignment (“Braswell Assignment”) states, in part, as follows:

Assignment of Claim: Braswell, Sam L. (hereinafter “Assignor”) 

Case 3:09-cv-02079-JCS Document 646 Filed 03/25/16 Page 3 of 8
4

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

having a mailing address at 4918 Rockhurst, San Antonio, TX in 

consideration of the sum of (the “Purchase Price” see below), does 

hereby transfer to ASM Capital, which includes ASM Capital, L.P., 

ASM Capital II, LP (hereinafter “ASM” or “Assignee”) having a 

mailing address at 7600 Jericho Turnpike, Suite 302, Woodbury, 

New York 11797, all of Assignor’s right, title, benefit, interest, 

voting rights, claims and causes of action in and to, or arising under 

or in connection with the claim or claims of Assignor against The 

1031 Tax Group (“the Debtor”), in bankruptcy proceedings (the 

“Proceedings”) in the United States Bankruptcy Court for the 

Southern District of New York (the “Court”), Case No. 07-11448 

including any and all Proof of Claim(s) associated with and filed by 

Assignor with the Court (the “Claim”) and; all cash, securities, 

instruments and other property which may be paid or issued in 

satisfaction of the Claim and all rights to receive interest, penalties, 

fees, and any damages from any cause of action or litigation which 

may be paid with respect to the Claim (the “Recovery”). This 

Assignment of Claim agreement (the “Agreement”) shall be deemed 

an unconditional assignment of the Claim for the purpose of 

collection and shall not be deemed to create a security interest. 

Denver Decl., Ex 1. The Braswell Assignment goes on to state that “[a] Proof of Claim in the 

amount of $51,958.97 . . . has been duly and timely filed in the Proceedings . . . .” Id. It also 

contains the language quoted above stating that the Assignment was “negotiated” and therefore, 

that “any rules of interpretation, construction, or resolving ambiguity against the drafter that 

otherwise apply, shall not apply hereto.” Id.

In the Criminal Case, some of the victims who had assigned their claims in the Bankruptcy 

Case argued that they, and not the assignee, were entitled to restitution payments. The court in 

that case (“the Virginia Court”) found that in principle, a crime victim’s right to restitution can be 

sold or assigned away. Virginia Order at 8. It went on to examine the specific assignments at 

issue to determine if the victims had, in fact, assigned away their right to restitution. One of the 

victims, Bear Valley, had entered into an assignment agreement with ASM containing language 

that is similar to the language in the assignments Stroud and Braswell signed. In particular, it 

provided, in part, that Bear Valley did:

absolutely and unconditionally sell, convey, and transfer to [ASM]. . 

. all of [Bear Valley’s] right, title, benefit, and interest in and to any 

and all of [Bear Valley's] pre-petition claim or claims . . . against 

1031 Tax Group in the Bankruptcy Court for the Southern District

of New York . . . and any other rights and benefits which may now 

exist, or come into existence in regards the Claim, including all 

cash, securities, instruments, or other property to be paid or issued 

by [1031 Tax Group] or any other party, directly or indirectly, in 

connection with or satisfaction of the Claim, including . . . all rights 

Case 3:09-cv-02079-JCS Document 646 Filed 03/25/16 Page 4 of 8
5

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

to receive interest, penalties, fees, and any damages from any cause 

of action, litigation, or rights of any nature against the Debtor, its 

affiliates, any guarantor or other third party in Court or any other 

court of competent jurisdiction which may exist, be paid, or issued 

with respect to and/or in satisfaction of the Claim.

Virginia Order at 9 (quoting Bear Valley Assignment) (emphasis added by Virginia Court). Based 

on the highlighted language in the assignment, the court found it “clear that ASM was purchasing 

more than just Bear Valley’s claim in the affiliated bankruptcy court” and that it was also 

purchasing “any recovery of funds on the debt underlying the bankruptcy claim in the other 

litigation.” Id. 

The Virginia Court went on to find that Bear Valley’s restitution and bankruptcy claims 

were, “in essence, the same claim,” reasoning as follows:

While it is true that, nominally, the bankruptcy claim is directed at 

1031 Tax Group while the restitution claim is against Okun 

personally, both Okun and the Court have recognized that these 

claims are essentially the same. . . . Okun was the sole and 

controlling shareholder of 1031 Tax Group and that Okun’s personal 

assets are available to satisfy either or both of the restitution or 

bankruptcy actions. . . . Furthermore, examination of the supporting 

documentation submitted by Bear Valley and ASM reveals that the 

source of the claim against 1031 Tax Group in bankruptcy is the 

same as the restitution claim against Okun: the claim amounts, 

account numbers, and involved parties are all identical. 

Id. at 10. Consequently, the court ordered that Bear Valley’s restitution payment be made directly 

to ASM. Id.

ASM contends the reasoning of the court in the Criminal Case applies here as well, citing 

the language in the Stroud and Braswell Assignments, as well as the fact that the amounts of the 

assignments correspond exactly to the amounts of their claims in this action. See Declaration of 

Douglas Wolf (“Wolf Decl.”), Ex. B (filings from Bankruptcy Case reflecting amounts of claims). 

ASM’s General Counsel has also provided a declaration explaining that ASM acquired 30 claims 

in the Bankruptcy Case and that other than the challenges of Stroud and Braswell in this case, and

a handful of challenges in the Criminal Case regarding restitution payments, “the rights of ASM to 

receive distributions from any source under these assignment agreements have not been 

questioned.” Wolf Decl. ¶ 3. According to Wolf, who was involved in the negotiation of the 

assignments, the assignments with Stroud and Braswell were negotiated “at arm’s length.” Id. ¶¶

Case 3:09-cv-02079-JCS Document 646 Filed 03/25/16 Page 5 of 8
6

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

2, 4. Wolf further states that “the Assignments were intended to assign to ASM any and all of 

Claimants’ rights to recoupment, restitution, or damages, regardless of source, arising out of or 

relating to the Ponzi scheme operated by Okun and/or his entities” and that [p]rior to proposed 

distribution in [this action], the Claimants never contended that the Assignment limited ASM to 

recovery from the Estate.” Id. ¶ 5. Wolf also states that based on his review of the Proof of 

Claims (“POCs”) and the underlying claims, “the POC’s and the underlying claims seek to recoup 

the funds misappropriated by the Debtor, Okun and/or other [QIs] in the course of the Ponzi 

scheme.” Id. ¶ 6.

Stroud and Braswell argue that the Assignments are limited to recovery from the Estate in 

the Bankruptcy Case based on the words “in bankruptcy proceedings . . . in the United States 

Bankruptcy Court for the Southern District of New York.” Docket No. 640 at 2. They also point 

out that the Assignments reference the POCs, which relate only to the Bankruptcy Case. Id. To 

the extent there is any ambiguity, they contend, it should be construed in their favor because the 

assignment agreements were drafted by ASM. Id. To the extent the Assignments expressly state 

that they were “negotiated,” Stroud and Braswell contend this is untrue, and Braswell has filed a 

declaration stating as much. See Braswell Decl., ¶ 2. According to Braswell, he was sent a 

preprinted form to sign and there “were no negotiations concerning the terms of the agreement.” 

Id. Braswell and Stroud also argue that the decision in the Criminal Case finding that restitution 

should be paid to ASM under a similar assignment was incorrectly decided and that this Court 

should reject the interpretation of the Virginia Court. Id.

III. ANALYSIS

A. Legal Standard2

“The fundamental, neutral precept of contract interpretation is that agreements are 

construed in accord with the parties’ intent” and “the best evidence of what parties to a written 

 

2 Both the Stroud Assignment and the Braswell Assignment provide that they will be “governed 

by and construed in accordance with the laws of the State of New York.” Denver Decl., Exs. 1 & 

3. Federal district courts apply the choice of law rules of the state in which they are located. 

Because California courts generally enforce contractual choice of law provisions, see 

Hatfield v. Halifax PLC, 564 F.3d 1177, 1182 (9th Cir. 2009), the Court applies New York law to 

the interpretation of the Assignments.

Case 3:09-cv-02079-JCS Document 646 Filed 03/25/16 Page 6 of 8
7

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

agreement intend is what they say in their writing.” Greenfield v. Philles Records, Inc., 98 N.Y.2d 

562, 569 (2002) (internal quotations and citations omitted). Consequently, “a written agreement 

that is complete, clear and unambiguous on its face must be enforced according to the plain 

meaning of its terms.” Id.

The question of whether a contract is ambiguous is one of law for the court. Kass v. Kass, 

91 N.Y.2d 554, 566 (N.Y. 1998). Under New York law, ambiguity is determined by looking 

“within the four corners of the document, not to outside sources.” Id. (citation omitted). 

566 (N.Y. 1998). A contract is unambiguous “if the agreement on its face is reasonably

susceptible of only one meaning.” Greenfield v. Philles Records, 98 N.Y.2d 562, 569 (N.Y.

2002) (emphasis added). Conversely, “[a] contract is ambiguous if the provisions in controversy

are reasonably or fairly susceptible of different interpretations or may have two or more

different meanings.” Feldman v. National Westminster Bank, 303 A.D.2d 271, 271 (N.Y. 2003)

(internal quotations omitted and emphasis added).

B. Discussion

Applying the principles set forth above, the Court finds that the Braswell and Stroud 

Assignments are unambiguous as to the scope of the Assignments, assigning to ASM not only 

claims to be paid out of the estate in the Bankruptcy Case but also Stroud and Braswell’s claims in 

this action. In particular, the Braswell Assignment assigns “all . . . right, title, benefit, interest, 

voting rights, claims and causes of action in and to, or arising under or in connection with the 

claim or claims of Assignor against The 1031 Tax Group” and assigns “all cash, securities, 

instruments and other property which may be paid or issued in satisfaction of the Claim and all 

rights to receive interest, penalties, fees, and any damages from any cause of action or litigation 

which may be paid with respect to the Claim.” Similarly, the Stroud Assignment is framed 

broadly, assigning “all of [Stroud’s] right, title, benefit and interest in and to any and all of 

[Stroud’s] prepetition claim or claims, as more specifically set forth as any right to payment (the 

“Claim”), against The 1031 Tax Group.” It goes on to state that assignment “includes any Proof 

of Claim (defined below), along with voting and any other rights and benefits which may now 

exist, or come into existence in regards the Claim, all cash, securities, instruments and other 

Case 3:09-cv-02079-JCS Document 646 Filed 03/25/16 Page 7 of 8
8

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

property, to be paid or issued by Debtor or any other party, directly or indirectly, in connection 

with or satisfaction of the Claim . . and all rights to received interest, penalties, fees, and any 

damages from any cause of action, litigation or rights of any nature against Debtor, its affiliates, 

any guarantor or other third party, which may be paid or issued with respect to and/or in 

satisfaction of the Claim.” 

Like the Virginia Court, the undersigned concludes that Braswell and Stroud’s claims in 

this case are essentially the same claims they asserted in the Bankruptcy Case: in both they are 

trying to recover the Exchange Funds that they lost when they deposited them with QIs associated 

with the 1031 Tax Group. This is apparent from the fact that the amounts of the Stroud and 

Braswell Assignments exactly match the claim amounts in this action. As a consequence, the 

Court finds that the broad language of the Assignments includes the payments on the claims in this 

action. The Court rejects Braswell and Stroud’s assertion that the Assignments cover only 

payments out of the Estate because of the reference in the Assignments to the Bankruptcy Case. 

Neither Assignment contains language expressly limiting the Assignment to payments out of the 

bankruptcy estate and the broad language quoted above points toward a contrary interpretation of 

the Assignment language. Nor does the reference to POCs imply such a limitation as the POCs 

are listed only as an example of the claims that are assigned. In short, the Assignments are 

reasonably susceptible of only one meaning: that Braswell and Stroud assigned any payments on 

their claims in this action to ASM. 

IV. CONCLUSION

For the reasons stated above, the Court directs Plaintiffs to make settlement payments on 

the Braswell, Stroud and Schoenfeld claims in this action directly to ASM, pursuant to the 

assignments between ASM and those individuals. 

IT IS SO ORDERED.

Dated: March 25, 2016

______________________________________

JOSEPH C. SPERO

Chief Magistrate Judge

Case 3:09-cv-02079-JCS Document 646 Filed 03/25/16 Page 8 of 8