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 IN PART AND DENYING IN 

PART DEFENDANTS’ MOTION IN LIMINE TO EXCLUDE 

IRRELEVANT EXPERT WITNESS TESTIMONY [ECF No. 179] 

I. INTRODUCTION 

 Before the Court is Defendants’ motion in limine to exclude irrelevant 

expert witness testimony [ECF No. 179]. No hearing is necessary. 

 For the reasons below, the Court GRANTS the motion IN PART and 

DENIES it IN PART. 

II. BACKGROUND 

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

investment fund organized and operated by Defendants. The investment 

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

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

Legisi. Sierra Equity Group (“Sierra”) was the broker-dealer that 

coordinated the investment between McKnight/Legisi and Defendants. 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 

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payments to invest in Defendants’ other businesses and for professional 

fees that were unrelated to the real estate investment fund. 

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. 

 Trial is scheduled to begin May 24, 2022. 

 Plaintiff intends to call Charles Porten (“Porten”) as an expert on 

investments/investing, the securities industry, and real estate hedge funds. 

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 

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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 

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 

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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 

 Defendants move to exclude certain expert testimony. 

Defendants say trial is limited to two issues: (1) “Whether actions 

taken by Royal Palm Investment Management Company, LLC were 

impermissible under the parties [sic] Partnership Agreement and/or the 

Florida Partnership Act”; and (2) “Whether the transfer of assets by 

convicted Ponzi schemer Gregory McKnight were fraudulent transfers that 

can be traced to the individual defendants and recovered by the Receiver 

Robert Gordan [sic].” [ECF No. 179, PageID.7940]. 

Defendants highlight four opinions Porten intends to offer. They say 

those opinions are irrelevant to the issues remaining in this case. The 

opinions are: 

(1) “The investment recommended by the Defendants was not 

suitable for Legisi”; 

(2) “The investment recommended by Defendants would not 

pass a reasonable basis suitability test”; 

(3) “There were numerous improper and misleading disclosures 

of key documents and undisclosed conflicts of interest”; and 

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(4) “The Defendants did not conduct proper due diligence on 

Legisi, ignoring red flags and failing the basic ‘know your 

customer’ requirement.” 

[Id., PageID.7942]. 

 Plaintiff says Porten’s opinions are relevant to his fraudulent transfer 

claim under M.C.L. § 566.34(1). 

 Before addressing the challenged opinions, it is necessary to discuss 

Plaintiff’s claim under M.C.L. § 566.34(1). 

A. M.C.L. § 566.34(1) 

 Plaintiff’s claim under this statute is based on transfers that were 

made by Legisi with “actual intent to hinder, delay, or defraud” creditors. 

See M.C.L. § 566.34(1). 

 As Plaintiff points out, Judge Tarnow already determined that the 

actual intent to defraud element is satisfied based on the Ponzi scheme 

presumption: 

Under the “Ponzi scheme presumption,” courts have found 

that investment transfers through Ponzi schemes are 

presumed to be made with “actual intent to hinder, delay or 

defraud” creditors. See In re Bernard L. Madoff Inv. Secs. 

LLC, 458 B.R. 87, 104 (Bankr. S.D.N.Y. 2011) (finding that the 

‘Ponzi scheme presumption’ establishes a debtor’s fraudulent 

intent). Therefore, under this presumption, the actual intent to 

defraud element of Plaintiff’s UFTA claims is satisfied 

[See ECF No. 165, PageID.7722]. 

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 With the intent element satisfied, the burden of proof shifts to 

Defendants to prove that they received the transfers “in good faith” and “for 

a reasonably equivalent value.” M.C.L. § 566.38(1). 

B. Opinions 1 and 2 

Defendants say Plaintiff’s securities claims have been dismissed and 

that “the suitability of an investment . . . has nothing to do with whether the 

Management Company proper[l]y conducted its operations after Mr. 

McKnight made his investment or whether the transfer of money was a 

fraudulent conveyance.” [ECF No. 179, PageID.7942]. 

 Plaintiff says these opinions are relevant to whether Defendants 

provided “reasonably equivalent value” for the transfers of funds. Plaintiff 

says that Porten will opine that an investment in Defendants’ real estate 

fund was unsuitable for Legisi or any other investor. In reaching this 

opinion, “Porten compares the attributes of [Defendants’ fund] with other 

real estate private equity funds, including its astronomical management 

fees, the general partner’s 50% profit share (with no capital invested), lack 

of liquidity for seven years, no track record, and inexperience of the 

management team.” [ECF No. 180, PageID.7999-8000]. Porten’s 

testimony will also include how Bruce Rosetto’s financial projections 

showed that while it was an “excellent rate of return for [Defendants],” 

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Legisi “would attain a ‘very slim’ 20% aggregate return on its investment 

over five years, i.e., four percent per year, on average, at a time when a 

federally-insured bank account offered more than five percent per year.” 

[Id., PageID.7994-95]. 

 The Court agrees with Plaintiff. Porten’s testimony regarding the 

suitability of investment is relevant to whether Legisi received a “reasonably 

equivalent value” for its investment. See In re Michigan Mach. Tool Control 

Corp., 381 B.R. 657, 669 (Bankr. E.D. Mich. 2008) (“Reasonably equivalent 

value” is determined based on “all the facts and circumstances.” (citation 

omitted)). 

 The Court DENIES Defendants’ motion with respect to Porten’s first 

two opinions. 

C. Opinion 3 

Defendants say the third opinion (i.e., that “[t]here were numerous 

improper and misleading disclosures of key documents and undisclosed 

conflicts of interest”) is not relevant because the alleged improper and 

misleading disclosures concerned the dismissed securities act claims. 

Plaintiff appears to agree that this opinion is no longer relevant. 

Indeed, he says “Mr. Porten’s testimony on the Defendants’ failures to 

disclose pertinent facts to Legisi would not be relevant now that the 

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securities fraud claims are no longer in the case.” [ECF No. 180, 

PageID.8000]. 

 The Court GRANTS Defendants’ motion with respect to the third 

opinion and excludes Porten’s testimony on this opinion. 

D. Opinion 4 

 Defendants argue that the fourth opinion is “irrelevant because it is 

based on an inapplicable Financial Industry and Regulatory Authority 

(‘FINRA’) ‘know your customer rule’ and [because it] fails to identify one 

alleged ‘red flag’ that the defendants had a duty to recognize and actually 

did become aware of and miss.” [ECF No. 179, PageID.7942-43]. 

Defendants say it is undisputed that they were not the sellers of the 

investment to Legisi/McKnight (Sierra was), they had no contact with 

McKnight, and they were not members of the FINRA. 

 Plaintiff says Porten’s testimony regarding Defendants’ failure to 

conduct proper due diligence and evidence that they ignored red flags is 

relevant to demonstrate their lack of good faith under M.C.L. § 566.38. The 

Court agrees. 

 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, 

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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). 

 Contrary to Defendants’ contention, whether they ignored “red flags” 

about Legisi and what due diligence they engaged in are relevant to 

whether they received the transfers in good faith. Judge Tarnow addressed 

the “red flags” known to Defendants in his summary judgment order: 

Defendants received no shortage of red flags regarding 

Plaintiff’s fraudulent purposes. Legisi’s website contained 

outlandish promises of high returns, which Bruce Rosetto 

concluded was an “untenable business proposition.” A google 

search of Legisi would have also found the CNNMoney.com 

article which labeled Legisi as a “possible scam” and 

highlighted its website as containing red flags for potential 

investors. Sierra even prepared a Suspicious Activity Report 

about Legisi which Bruce Rosetto merely dismissed as 

“foolish.” But perhaps the most glaring red flag was the SEC’s 

inquiry to Sierra regarding Legisi’s investments. This evidence 

indicates that a valid dispute [exists] regarding whether 

Defendants knew or at least should have known of Plaintiff’s 

fraudulent transfer. 

[ECF No. 165, PageID.7722-23 (internal citations omitted)]. 

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 Porten may testify regarding the many red flags throughout the Legisi 

website and other events in the record that he opines should have alerted 

Defendants that Legisi was a fraud. 

Moreover, although Defendants were not members of FINRA and 

they did not have contact with McKnight, Porten also may opine that 

Defendants failed the basic “know your customer” requirement. 

As Plaintiff points out, Bruce Rosetto, as Sierra’s attorney, was 

specifically tasked with advising Sierra – who was subject to FINRA’s 

requirements – whether it should accept Legisi’s funds for investment. As 

counsel for Sierra, Bruce Rosetto needed to engage in the level of due 

diligence required for his broker-dealer client. 

Because this opinion concerns the level of due diligence Bruce 

Rosetto engaged in or should have engaged in, it also is relevant for the 

jury when determining what Bruce Rosetto/Defendants knew or should 

have known concerning whether they received Legisi’s transfers in good 

faith. See In re World Vision, 275 B.R. at 658-59. 

Defendants say that if the Court finds the “red flag” opinion relevant to 

the fraudulent transfer analysis, “it should still be excluded [under] Fed. R. 

Evid. 403 as unfairly prejudicial and a waste of time because it is based on 

a FINRA standard that does not apply and [there were] no actual instances 

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when a purported ‘red flag’ was presented to defendants and ignored by 

them.” [Id., PageID.7943]. 

This argument lacks merit. What Defendants knew or should have 

known about Legisi is what is at issue. Porten’s testimony regarding red 

flags which a reasonably diligent person would have noticed is directly 

relevant to whether Defendants received Legisi’s funds in good faith. See 

In re World Vision, 275 B.R. at 658-59. Moreover, contrary to Defendants’ 

assertion that there were no red flags, Judge Tarnow already held that 

“Defendants received no shortage of red flags regarding Plaintiff’s 

fraudulent purposes.” [See, supra, ECF No. 165, PageID.7722-23]. 

The Court DENIES Defendants’ motion with respect to opinion four. 

V. CONCLUSION 

The Court GRANTS IN PART and DENIES IN PART Defendants’ 

motion in limine to exclude irrelevant expert witness testimony [ECF No. 

179]. 

The Court excludes testimony regarding Porton’s third opinion. 

Porten may testify regarding the other challenged opinions.

IT IS ORDERED. 

 s/ Victoria A. Roberts 

 Victoria A. Roberts 

 United States District Judge 

Dated: May 5, 2022 

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