1

Although in the caption of the case Defendant is listed as “3D Marketing, LLC,” Defendant insists that its

proper name is “3-D Marketing, LLC.” As Plaintiff has no objection, in this memorandum opinion and order the court

intends that “3D Marketing, LLC” also include “3-D Marketing, LLC.” 

Memorandum Opinion and Order – Page 1

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

MICHAEL J. QUILLING, RECEIVER §

FOR SARDAUKER HOLDINGS, IBC and §

BRADLEY C. STARK, §

§

Plaintiff, §

§ Civil Action No. 3:06-CV-0293-L

v. § 

§

3D MARKETING, LLC,1 §

§

Defendant. §

MEMORANDUM OPINION AND ORDER

This case arises out of a lawsuit brought by the Securities and Exchange Commission

(“SEC”) against various defendants and relief-defendants for an alleged fraudulent investment

scheme. See SEC v. Megafund Corp., et al., No. 3-05-CV-1328-L (“Megafund Litigation”). In the

Megafund Litigation, the SEC alleges that Megafund Corporation (“Megafund”), an unlicensed

securities broker, along with Sardauker Holdings, IBC (“Sardauker”) and Bradley C. Stark (“Stark”),

raised more than $13 million from unwitting investors by making false representations regarding the

anticipated rate of return and by falsely promising that some of the profits generated from the sale

of securities would be used for charitable causes. The SEC alleges that the defendants in that case

ultimately diverted the invested funds for Ponzi payments to earlier investors and used them for

unauthorized expenditures. 

 

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Memorandum Opinion and Order – Page 2

On July 5, 2005, the court appointed Michael J. Quilling as the Receiver for all defendants

in the Megafund Litigation. On February 15, 2006, the Receiver filed this action against 3-D

Marketing, seeking to recover $150,000 transferred by Sardauker to 3-D Marketing. The Receiver

alleges that the transfers are fraudulent as a matter of law since Sardauker was operated as an illegal

Ponzi scheme by Stark. Defendant 3-D Marketing denies that the payments were fraudulent

transfers, and contends that one payment was a return on its initial $100,000 investment and the

second payment was a “loan” from the L.B. Charitable Trust, another Sardauker investor. The

parties filed cross-motions for summary judgment. 

Pursuant to 28 U.S.C. § 636(b), and an order of the court in implementation thereof, this

action was referred to United States Magistrate Judge Jeff Kaplan for pretrial management. On

February 8, 2007, the Findings and Recommendation of the United States Magistrate Judge were

filed, recommending that the court grant Plaintiff’s Motion for Summary Judgment, deny

Defendant’s Motion for Summary Judgment, and enter judgment against 3-D Marketing in the

amount of $150,000, together with prejudgment and postjudgment interest as allowed by law. The

magistrate judge further recommended that a constructive trust should be imposed on the funds

transferred by Sardauker and that 3-D Marketing should be ordered to disgorge the funds. Finally,

the magistrate judge found that the Receiver was entitled to recover costs and reasonable attorney’s

fees. 3-D Marketing filed objections to the findings and recommendations of the United States

Magistrate Judge (“Defendant’s Objections”) on February 14, 2007. The Receiver filed a reply to

Defendant’s objections on February 20, 2007 (“Receiver’s Reply”). 

 

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Memorandum Opinion and Order – Page 3

The magistrate judge recommended that the court grant the Receiver’s motion for summary

judgment and deny Defendant’s motion for summary judgment because Defendant 3-D Marketing

had not adduced any evidence to contradict the copious evidence submitted by the Receiver in

support of his motion for summary judgment, wherein he contended that two $75,000 payments

made by Sardauker to 3-D Marketing constituted voidable transfers under the Texas Uniform

Fraudulent Transfer Act (“UFTA”), which provides in relevant part that:

(a) A transfer made or obligation incurred by a debtor is fraudulent . . . if the

debtor made the transfer or incurred the obligation:

(1) with actual intent to hinder, delay, or defraud any creditor of the

debtor. . . . 

Tex. Bus. & Comm. Code Ann. § 24.005 (Vernon 2002). See Findings and Recommendation at 6

(setting forth the uncontroverted summary judgment submitted by the Receiver). 

Defendant has objected to the Findings and Recommendations, contending: (i) that the

magistrate judge’s finding that Sardauker was operated as an illegal Ponzi scheme was erroneous,

as a Ponzi scheme can only be proved up by expert testimony; (ii) that the Ponzi scheme’s existence

is a contested issue of fact; (iii) that the court should revise the magistrate judge’s findings and

recommendation for failure to note a loan agreement between Defendant and LB Charitable Trust;

and (iv) there is no legal basis for the court to bar it from receiving back a portion of the money it

invested with Sardauker. The court will address these objections in turn.

Defendant first objects to the magistrate judge’s finding that Sardauker was operated as an

illegal Ponzi scheme, and argues that a Ponzi scheme can only be proved up by expert testimony.

This objection is overruled. Defendant offers no case law to support the contention that an expert

witness is needed to testify as to the existence of a Ponzi scheme. The court has been unable to

locate any support for this proposition on its own. Moreover, as the magistrate judge duly noted,

 

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Memorandum Opinion and Order – Page 4

“judges in this district have routinely made such a determination at the summary judgment stage

based on evidence similar to that presented by the Receiver in this case.” Findings and

Recommendation at 5 (and cases cited therein). The magistrate judge further correctly states that

“[a]lthough not binding on 3-D Marketing, the court notes two other cases where it determined that

Sardauker was operated as an illegal Ponzi scheme.” Id. at n.2 (citing Quilling v. Stark, No. 3:05-

CV-1976-BD, op. at 5 (N.D. Tex. Feb. 7, 2007) and Quilling v. Tschebaum, No. 3:05-CV-1465-L,

op. at 5 (N.D. Tex. July 21, 2006)).

Defendant’s second objection is that the Ponzi scheme’s existence is a contested issue of fact.

This objection is overruled. As the Receiver correctly states in his reply, Defendant never offered

any factual evidence contesting this point. Reply at 2. That Defendant denied the existence of a

Ponzi scheme in its answer is not the same as submitting summary judgment evidence. 

As its third objection, Defendant requests that the court revise the magistrate judge’s findings

for failure to note a loan agreement between Defendant and LB Charitable Trust. This objection is

overruled. Any loan agreement between Defendant and LB Charitable Trust is irrelevant to liability

under the UFTA. As stated by the Receiver in his reply, “any agreement or obligation between

Defendant and LB Charitable Trust is immaterial and more appropriately litigated in another case.”

Id. at 2.

Finally, Defendant objects that there is no legal basis for the court to bar it from receiving

back a portion of the money it invested with Sardauker. This objection is overruled. Again, this

contention is immaterial to claims arising under the UFTA. The court is not saying that Defendant

cannot recover any money back at a later juncture in the case. At this time, however, the Receiver,

appointed by the court as receiver for all defendants to the Megafund Litigation, is authorized to take

 

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Memorandum Opinion and Order – Page 5

possession of the transferred amounts under the UFTA as part of the administration of the

Receivership. 

Having reviewed the pleadings, file and record in this case, the findings and conclusions of

the magistrate judge, Defendant’s Objections, and Receiver’s Reply, the court determines that the

findings and conclusions are correct. Defendant’s Objections are overruled. The magistrate judge’s

findings are accepted as those of the court. Accordingly, the court grants Receiver’s Motion for

Summary Judgment and denies 3-D Marketing’s Motion for Summary Judgment. The court will

issue judgment against 3-D Marketing in the amount of $150,000, together with prejudgment and

postjudgment interest as allowed by law and will impose a constructive trust on the funds transferred

by Sardauker. The court also orders that 3-D Marketing disgorge the funds. A final judgment

dismissing this case will issue by separate document as required by Fed. R. Civ. P. 58. 

It is so ordered this 28th day of February, 2007.

_________________________________

Sam A. Lindsay

United States District Judge

 

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