UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTICT OF MICHIGAN 

SOUTHERN DIVISION 

ROBERT D. GORDON, Receiver of 

Legisi Marketing, Inc., Gregory N. 

McKnight, and Legisi Holdings, LLC, 

 

 Plaintiff, Case No. 09-11770 

 Honorable Victoria A. Roberts 

v. 

ROYAL PALM REAL ESTATE 

INVESTMENT FUND I, LLLP, et al., 

 

 Defendants. 

_________________________________/ 

ORDER GRANTING PLAINTIFF’S MOTION 

IN LIMINE TO EXCLUDE EVIDENCE OF ALLEGED 

DEFAMATION AND ITS ALLEGED EFFECTS [ECF No. 178] 

I. INTRODUCTION 

 Before the Court is Plaintiff’s motion in limine to exclude evidence of 

alleged defamation and its alleged effects [ECF No. 178]. No hearing is 

necessary. 

 For the reasons below, the Court GRANTS the motion. 

II. BACKGROUND 

 A. This Action 

This case arises from funds transferred for investment in a real estate 

investment fund organized and operated by Defendants. The investment 

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was made with funds transferred by Gregory McKnight – the operator of an 

illegal investment/Ponzi scheme called “Legisi” – with money derived from 

Legisi. Law enforcement shut down the Legisi scheme shortly after 

McKnight/Legisi invested in Defendants’ real estate fund. 

The Court appointed Plaintiff, Robert Gordon, as the receiver for the 

estates of McKnight and Legisi. As receiver, Plaintiff took possession of 

Legisi’s assets, liquidated them, and paid restitution to victims of the Legisi 

Ponzi scheme. 

Plaintiff brings this action against Bruce Rosetto, Roxanne Rosetto, 

Robert Rosetto, and several entities owned and/or controlled by the 

Rosettos. Bruce and Roxanne are married; Robert is their son. 

Plaintiff seeks to recover the funds McKnight/Legisi transferred to 

Defendants for the allegedly fraudulent real estate investment fund. 

Plaintiff alleges Defendants knew or should have known that the money 

McKnight/Legisi transferred to the real estate investment fund were derived 

from an illegal investment scheme and, therefore, Defendants should not 

have accepted them. Plaintiff also alleges that the Defendants are liable 

for improper use of the funds invested by McKnight/Legisi – including 

payments to invest in Defendants’ other businesses and for professional 

fees that were unrelated to the real estate investment fund. 

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Four claims remain: (1) Breach of Partnership Agreement (Count V); 

(2) Violation of Florida Revised Uniform Limited Partnership Act (Count VI); 

(3) Avoidance of Fraudulent Transfers, M.C.L. § 566.35(1) (Count X); and 

(4) Avoidance of Fraudulent Transfers, M.C.L. § 566.34(1) (Count XI). 

Counts V and VI are against Bruce Rosetto and Royal Palm Investment 

Management Company only. Plaintiff seeks to hold Bruce Rosetto 

personally liable on a veil-piercing theory under all four remaining claims. 

The Defendants deny liability and contend they did nothing wrong. 

They claim the illegal source of the funds was hidden from them and the 

actions they took were authorized by the partnership agreement to further 

the interests of the real estate investment fund. 

Notably, Defendants can avoid liability on Plaintiff’s fraudulent 

transfer claims if they can prove that they received the transfers of funds 

both in good faith” and “for a reasonably equivalent value.” M.C.L. § 

566.38(1). 

 Trial is scheduled to begin May 24, 2022. 

B. Alleged Defamation and Defendants’ Defamation Lawsuit

 In 2014, Plaintiff’s counsel served subpoenas for documents on 

Greenberg Traurig (“Greenberg”), which was one of Bruce Rosetto’s law 

firms that served as counsel for the real estate fund. Greenberg objected to 

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the subpoenas and filed an action in the Southern District of Florida for 

adjudication of its objections. 

A reporter for the Daily Business Review (“DBR”) picked up on the 

dispute and made inquiries regarding the underlying action. On April 4, 

2014, an article was published in the DBR which summarized Plaintiff’s 

claims and quoted both sides’ attorneys. In a section entitled “Fraud 

Alleged,” the article quoted one of Plaintiff’s attorneys as stating: “The 

investigation that we have conducted to date has confirmed that Mr. 

Rosetto participated in securities fraud with respect to the Royal Palm Real 

Estate Investment Fund.” 

In March 2016, nearly two years after the DBR article was published, 

Bruce Rosetto filed an action for defamation against Plaintiff’s attorneys in 

Florida. Bruce Rosetto later amended his complaint to add his wife, 

Roxanne, as a plaintiff and to add a count for loss of consortium allegedly 

caused by the defamation. 

Plaintiff’s attorneys moved to dismiss the action for lack of subject 

matter jurisdiction pursuant to the Barton Doctrine, which requires that a 

claimant obtain leave of the receivership court before filing suit against a 

court-appointed receiver or attorneys/agents retained by the receiver. The 

Rosettos indisputably failed to seek leave from the appointing court. 

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In June 2017, the Florida court granted the motion to dismiss based 

on the Barton Doctrine. See Rosetto v. Murphy, No. 16-81342, 2017 WL 

2833453, at *3 (S.D. Fla. June 30, 2017) (noting that the quoted statement 

was authorized because it “was based directly on public court filings such 

as the Receiver’s Complaint against the Rosettos in the Michigan Action”). 

The Eleventh Circuit affirmed the dismissal of the Rosettos’ complaint, and 

the Supreme Court denied the Rosettos’ application for a writ of certiorari. 

III. LEGAL STANDARD 

 A motion in limine refers to “any motion, whether made before or 

during trial, to exclude anticipated prejudicial evidence before the evidence 

is actually offered.” Luce v. United States, 469 U.S. 38, 40 n.2 (1984). The 

purpose of these motions is “to narrow the issues remaining for trial and to 

minimize disruptions at trial.” United States v. Brawner, 173 F.3d 966, 970 

(6th Cir. 1999). 

The Court may exclude evidence on a motion in limine “only when 

[the] evidence is determined to be clearly inadmissible on all potential 

grounds.” United States v. Anderson, ---- F.Supp.3d ----, 2021 WL 

4427251, at *2 (E.D. Mich. Sept. 27, 2021). If the Court cannot determine 

whether evidence is clearly inadmissible on all grounds, it should defer 

evidentiary rulings until trial so that questions of foundation, relevancy, and 

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potential prejudice can be resolved in the proper context. Id. The Court 

should rarely grant a motion in limine which “exclude[s] broad categories of 

evidence.” Sperberg v. Goodyear Tire & Rubber Co., 519 F.2d 708, 712 

(6th Cir. 1975). The “better practice is to deal with questions of admissibility 

when they arise.” Id. 

Only relevant evidence is admissible. Fed. R. Evid. 402. Evidence is 

relevant if “it has any tendency to make a fact more or less probable than it 

would be without the evidence,” and “the fact is of consequence in 

determining the action.” Fed. R. Evid. 401. Even if evidence is relevant, the 

Court may exclude it “if its probative value is substantially outweighed by a 

danger of one or more of the following: unfair prejudice, confusing the 

issues, misleading the jury, undue delay, wasting time, or needlessly 

presenting cumulative evidence.” Fed. R. Evid. 403. The Court has broad 

discretion regarding the admissibility of evidence at trial. Frye v. CSX 

Transp., Inc., 933 F.3d 591, 598 (6th Cir. 2019). 

IV. DISCUSSION 

 Plaintiff seeks to preclude evidence of the alleged defamation of 

Bruce Rosetto and its alleged effects – including Roxanne Rosetto’s 

purported suicide attempt. Plaintiff says the alleged defamation and its 

alleged effects are not relevant to any element of any claim or defense. He 

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says his claims are based on events that occurred between 2007 and 

2011; the alleged defamation and its asserted effects occurred in 2014. 

Alternatively, Plaintiff argues that even if this evidence has some 

relevance, the Court should exclude it under Fed. R. Evid. 403 because it 

would be substantially more prejudicial than probative, would confuse the 

issues, and would mislead the jury. Plaintiff says evidence of the alleged 

defamation and its claimed effects on the Rosettos – including allegedly 

causing Roxanne Rosetto to attempt suicide – would inflame the jury on a 

tangential matter and would have an undue tendency to suggest a decision 

on an improper and emotional basis. 

Finally, Plaintiff says the Court should reach the same conclusion if, 

as expected, Defendants propose to offer this evidence as part of a 

narrative of the alleged adverse effects of this litigation. 

Defendants say the Court should deny Plaintiff’s motion because 

“evidence of how this litigation and Plaintiff’s allegations against them has 

affected them is relevant and admissible to show their ‘state of mind’ and 

‘good faith’ acceptance of any funds transferred to or received by them 

from Legisi.” [ECF No. 181, PageID.8050]. 

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 Defendants quote Swirple v. MGM Grand Detroit, LLC, 2020 WL 

561904, at *4 (Mich. Ct. App. Feb. 4, 2020), for the legal conclusion: “The 

primary orientation with regard to ‘good faith’ is whether defendant 

knowingly participated in acts or as part of a plan to hinder or defraud 

plaintiffs.” 

Defendants then say, “Courts look to the surrounding circumstances 

to determine the ‘state of mind’ of the recipient and evidence on that issue 

can vary according to the circumstances. See, e.g., id. at *5.” [ECF No. 

181, PageID.8052]. Defendants cite Swirple for this statement. However, 

Swirple does not support this proposition. In fact, the term “state of mind” 

is not used anywhere in Swirple. 

Finally, Defendants say: 

Here, as presented by the defendant in Swirple, the Rosettos 

seek to present relatively brief evidence of how they responded 

when they became aware of the true source of Legisi’s funds. 

Unlike the likely reaction of people who would have known of 

his illicit actions and walked away, they were shocked and yet 

determined to maintain the Fund’s investment in the properties. 

They continued to pay the bills, maintain the properties, search 

for tenants and look for new financing alternatives. Most of the 

time without being paid for their work. 

When litigation ensued and they were named as defendants 

and with all kinds of untoward actions alleged to have been 

committed by them, they experienced stress, health concerns, 

lost work opportunities and Mrs. Rosetto even attempted 

suicide. She had never even had a traffic ticket but was being 

labeled a fraud in cahoots with a criminal. This evidence will 

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show that the Rosettos took and take this matter seriously. 

They did not believe they had done anything wrong in accepting 

the Legisi funds. They had acted in good faith accepting and 

working with those funds, and the effect the allegations against 

them has had on them is evidence of their “state of mind” when 

they accepted those funds. 

[ECF No. 181, PageID.8052 (internal paragraph break added)]. 

Although Defendants mischaracterize Swirple, the Court will allow 

Defendants to testify that they were shocked to learn the source of Legisi’s 

funds since that is relevant to their good faith defense – i.e., that they did 

not know Legisi was a Ponzi scheme. Moreover, this testimony does not 

fall within the purview of Plaintiff’s motion, because it is not evidence of the 

alleged defamation of Bruce Rosetto or its alleged effects on Defendants. 

The Court will also allow Defendants to testify that they continued to 

manage the investment in the properties after learning of the Ponzi 

scheme. It is not evidence of the alleged defamation or its alleged effects. 

But the Court will not allow post-claim accrual state of mind testimony 

(“When litigation ensued and they were named as defendants and with all 

kinds of untoward actions alleged to have been committed by them, they 

experienced stress, health concerns, lost work opportunities and Mrs. 

Rosetto even attempted suicide.”). 

Swirple does not support the proposition that courts look to a 

recipient’s state of mind in determining whether they proved they received 

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transfers in good faith. Determining whether Defendants received funds in 

“good faith” is judged using an objective standard. In re World Vision Ent., 

Inc., 275 B.R. 641, 658-59 (Bankr. M.D. Fla. 2002). Under this standard, 

Courts look to what the transferee objectively knew or 

should have known rather than examining what the 

transferee actually knew from a subjective standpoint. If the 

circumstances would place a reasonable person on inquiry 

of a debtor’s fraudulent purpose, and diligent inquiry would 

have discovered the fraudulent purpose, then the transfer is 

fraudulent. A transferee does not act in good faith when he 

has sufficient knowledge to place him on inquiry notice of 

the debtor’s possible insolvency. Further, a transferee may 

not remain willfully ignorant of facts which would cause it to 

be on notice of a debtor’s fraudulent purpose, and then put 

on blinders prior to entering into transactions with the debtor 

and claim the benefit of [the good faith defense]. 

Id. at 659 (internal citations, brackets, and quotation marks omitted). 

Evidence that Defendants experienced stress, health concerns, and 

lost work opportunities, and that Mrs. Rosetto attempted suicide when this 

litigation ensued is not relevant to whether Defendants “knew or should 

have known” of Legisi’s fraudulent purpose (i.e., that Legisi was a Ponzi 

scheme). 

Defendants’ argument that their stress and Mrs. Rosetto’s alleged 

suicide attempt show they did not know the source of the funds until suit 

was filed lacks merit. Defendants fail to show that only innocent 

defendants feel stress and/or attempt suicide. 

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Because Defendants fail to show that their stress and Mrs. Rosetto’s 

suicide attempt are relevant to their good faith, the Court will not allow 

Defendants to testify or submit evidence on these topics. The Court 

excludes evidence of the alleged defamation of Bruce Rosetto and its 

alleged effects on Defendants as not relevant under Fed. R. Evid. 401 and 

402. 

Moreover, as Plaintiff argues, even if this evidence did have some 

probative value, that probative value is substantially outweighed by the 

danger of unfair prejudice, confusing the issues, and misleading the jury. 

Fed. R. Evid. 403.

V. CONCLUSION 

The Court GRANTS Plaintiff’s motion in limine to exclude evidence of 

alleged defamation and its alleged effects [ECF No. 178]. 

IT IS ORDERED. 

 s/ Victoria A. Roberts 

 Victoria A. Roberts 

 United States District Judge 

Dated: May 5, 2022 

 

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