Court Opinion

ID: 5155798
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:18:35.903856+00
Date Added: 2024-06-11T08:25:19.833666
License: Public Domain

WINCHESTER, J., dissenting,
with whom HARGRAVE and KAUGER, JJ. join:
11 I respect the fact that the majority opinion labors to determine how to achieve equitable treatment for equally innocent investors in a Ponzi scheme. After carefully considering this Court's struggle and its rationale behind the holdings, I am persuaded that no answer to the issues raised in the opinion is quite satisfactory. But of the difficult choices, I am convinced that the Court's choice is not the best option.
12 The majority opinion begins with a question, which is whether the Department of Securities has the authority under the Oklahoma Uniform Securities Act to force innocent victims of a Ponzi scheme to return money they received that exceeded their original investment. The opinion ends with questions. "Should an investor segregate and hold all financial profits until a statute of limitations or laches expires? ... [SJhould an innocent investor be held to a higher standard of accountability and inquiry concerning his or her investments placed with a licensed securities dealer?" From the wording, one would expect the answers to these questions to be "No." Instead, the majority holds that the full power of the law may be employed to foree those innocent investors to "disgorge" unreasonable profits. The opinion leaves the district court with unsatisfactory subjective standards to determine what profits are unreasonable. Such a conclusion seems to invite a subsequent appeal.
13 The dissent to the Court of Civil Appeals was correct in concluding that there is simply no authority to grant power to the receiver in this case for bringing unjust enrichment claims against those innocent investors who profited from the Ponzi scheme. This Court's majority opinion recognizes that the inequity in forcing restitution of profits from innocent investors has kept some courts from ordering such "restitution." 1
T 4 The Johnson v. Studholme case quoted by the majority illustrates the dilemma: "Some investors who received 'fictitious profits' may have spent the money on education or other necessities many years ago.2 Then the federal district court's opinion observes that spending their investment money for necessities violates neither equity nor good conscience.
T5 The contrast is that some later investors who lost money may have been speculators who were willing to take great risks and were prepared to lose their investments. So, as Johnson correctly observes, there is no "neat answer." Are any of the innocent investors at fault for placing their money with a licensed security dealer? They have violated no law, nor is there any law requiring them to liquidate assets innocently purchased with what they believed to be lawfully obtained profits As the Johnson court observes, "In such cireumstances the courts may simply leave the parties where they were found." 3
T6 The Oklahoma Department of Securities appears to search for a deep pocket to reimburse innocent parties for their losses. Although that agency's motives may be just, the pockets they wish to empty belong to equally innocent parties. Since the Ponzi scheme began in December 1999, those profits could have been received almost ten years ago. The warning for investors now who are willing to take big risks with their funds is this, not only do you risk your money when you first invest it, you also risk a subsequent government intervention to take back the funds. The remedy supplied by this Court potentially does greater damage to innocent investors than the damage done if this Court were to leave all innocent investors where they now stand. Ultimately the individual must be responsible for investigating before investing. Accordingly, I respectfully dissent.

. Johnson v. Studholme, 619 F.Supp. 1347, 1350 (D.Colo.1985), aff'd, 833 F.2d 908 (10th Cir.1987) and quoted in 127 of the majority opinion of this Court.

. Johnson, 619 F.Supp. at 1350.

. Johnson, 619 F.Supp. at 1350.