Opinion ID: 3001395
Heading Depth: 3
Heading Rank: 3

Heading: The Set-off of Funds from the Sunset Financial

Text: Account Finally, the record supports the district court’s determination that Mr. Pollock and Mr. Jones violated the freeze orders by setting off, for their own benefit, $2,216,462.76 from Mr. Homa’s Sunset Financial account. Shortly after cancelling Mr. Homa’s interest in Banc Caribe, Mr. Pollock closed Mr. Homa’s Sunset Financial account. Before closing the account, however, he invoked the bank’s alleged right to set-off against the account by withdrawing $703,595.89 25 (...continued) account at Paine Webber in violation of the freeze orders. The receiver had already received compensation for that transfer from Paine Webber. 32 Nos. 06-3320 & 07-1590 on October 19, 1999, and $564,880.00, $96,600.00 and $851,386.87 on October 21. Mr. Pollock admitted that he did not contact anyone at the SEC or the district court before removing the funds from the Sunset Financial account. Mr. Pollock and Mr. Jones also admit that the removal of $2,216,462.76 from Mr. Homa’s account occurred after actual notice of the freeze orders and involved money that, without dispute, came from an account over which Mr. Homa had signatory authority. Mr. Pollock and Mr. Jones subsequently converted that portion of Sunset Financial’s assets to their own use. This knowing set-off against monies in an account over which Mr. Homa had signatory authority is established in the record. The freeze orders enjoined the defendants in the SEC action and those people acting in concert with them from disposing of the funds in any manner, directly or indirectly. The district court was on solid ground in finding Mr. Pollock and Mr. Jones in contempt for this set-off. Additionally, the record does not support Mr. Pollock’s assertion that the freeze orders violated Dominican law. The district court found, and we agree, that the record does not establish that any law of Dominica prohibited Banc Caribe, Mr. Pollock or Mr. Jones from complying with the freeze order. Mr. Pollock and Mr. Jones suggest generally that Banc Caribe needed to maintain liquidity to protect its investors and patrons. They do not, however, point to any particular amount of liquidity that the bank was required to maintain, and neither does the record show that the bank lacked any necessary liquidity at any point. Nos. 06-3320 & 07-1590 33 Moreover, the district court’s freeze order simply required that Mr. Pollock and Mr. Jones not move from the bank any funds associated with Mr. Homa or C4T. Two of their contumacious acts, the cancellation of Mr. Homa’s interest in Banc Caribe and the set-off of Mr. Homa’s funds in the Sunset Financial account, violated those freeze orders by removing funds from Banc Caribe for their own benefit. Compliance with the court’s orders would have resulted in Mr. Pollock and Mr. Jones leaving the funds in Banc Caribe, which, in contrast to their actions, presumably would have improved the liquidity of the bank.