Court Opinion

ID: 2962892
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:03:21.02432+00
Date Added: 2024-06-11T11:42:35.883020
License: Public Domain

USCA1 Opinion

	

          November 16, 1994                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                ______________________          No. 94-1248                      FEDERAL DEPOSIT INSURANCE CORPORATION, AS                       LIQUIDATING AGENT FOR BOSTON TRADE BANK,                                 Plaintiff, Appellee,                                          v.                  CARMEN W. ELIO AND ELAINE J. ELIO INDIVIDUALLY, AS                TRUSTEE OF THE ELIO FAMILY TRUST AND AS TRUSTEE OF THE                           SEAVIEW REALTY TRUST, ETC. AL.,                               Defendants, Appellants.                                   _______________                                     ERRATA SHEET
                                     ERRATA SHEET               The  opinion of this Court  issued on November  10, 1994, is          amended as follows:               Cover sheet:  Change  spelling of "Andrea Perander-Sweet" to          "Andrea Peraner-Sweet."               Page 12.  The  last line should  read:  . . . the debtor  of          the  financial institution  within five  years of  the F.D.I.C.'s          . . .  

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 94-1248                      FEDERAL DEPOSIT INSURANCE CORPORATION, AS                       LIQUIDATING AGENT FOR BOSTON TRADE BANK,                                 Plaintiff, Appellee,                                          v.                  CARMEN W. ELIO AND ELAINE J. ELIO INDIVIDUALLY, AS                TRUSTEE OF THE ELIO FAMILY TRUST AND AS TRUSTEE OF THE                         SEAVIEW REALTY TRUST, ETC., ET AL.,                               Defendants, Appellants.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                       [Hon. Mark L. Wolf, U.S. District Judge]
                                           ___________________                                 ____________________                                        Before                                Torruella, Chief Judge,
                                           ___________                           Campbell, Senior Circuit Judge,
                                     ____________________                             and Carter,* District Judge.
                                          ______________                                 ____________________            Stephen F. Gordon, with whom Stanley W. Wheatley and Gordon &
            _________________            ___________________     ________        Wise were on brief for appellants.
        ____            Jonathan W. Fitch, with whom Andrea Peraner-Sweet, Sally & Fitch,
            _________________            ____________________  _____________        Ann S. Duross, Assistant General Counsel, Colleen B. Bombardier,
        _____________                             _____________________        Senior Counsel, and Jeannette E. Roach, Counsel, for appellee Federal
                            __________________        Deposit Insurance Corporation.                                 ____________________                                  November 10, 1994                                 ____________________                            
        ____________________        *Of the District of Maine, sitting by designation.                                          2

                      CAMPBELL, Senior Circuit Judge.  This is an
                                ____________________            interlocutory appeal from a district court order granting a            preliminary injunction, granting an attachment, and            appointing a trustee pursuant to 12 U.S.C.   1821(d)(18) and            (19).1            I.   Background
                 __________                      Plaintiff is the Federal Deposit Insurance Corp.            ("F.D.I.C."), suing in its capacity as liquidating agent for            two banks, Boston Trade Bank and First Service Bank for            Savings ("First Service").2  Defendants include Carmen Elio,            his wife Elaine Elio individually and in her capacity as            trustee, and their daughter Teresa Elio in her capacity as            trustee, as well as various entities with which the Elios are            involved: the Elio Family Trust, the Seaview Realty Trust,            Faneuil Hall Securities, Inc. ("FH Securities"), Faneuil Hall            Financial Services, Inc. ("FH Financial Services"), and            Faneuil Hall Capital Group, Inc. ("FH Capital Group").                      Central to this case are a number of promissory            notes executed by Carmen Elio on which he subsequently            defaulted, and transfers made by Carmen Elio which the                                
            ____________________            1.  We shall assume without deciding, the issue having            neither been raised nor argued, that an interlocutory order            appointing a trustee is appealable under 28 U.S.C.              1292(a)(2), which provides for appellate jurisdiction over            "[i]nterlocutory orders appointing receivers."            2.  The F.D.I.C. was appointed liquidating agent of First            Service on March 31, 1989, and of Boston Trade Bank on May 3,            1991.                                         -3-
                                          3

            F.D.I.C. alleges were made with intent to hinder, defraud or            delay his creditors.                 A.   Promissory Notes
                      ________________                      In 1988, Carmen Elio borrowed the following sums            from First Service: (1) $400,000 on April 19 by means of an            unsecured promissory note with a term of three months; (2) $2            million on May 4 by means of an unsecured promissory note            with a term of three years; and (3) $1,450,000 on September            30 by means of a promissory note with a term of three years.             Elio defaulted on all three loans.                      On July 1, 1991, Carmen Elio and FH Financial            Services executed a note for $564,619.35 from the F.D.I.C.,            which had been appointed liquidating agent of First Service            in 1989.  The amount represented the outstanding balance on a            1987 loan from First Service to Carmen and Elaine Elio,            secured by a mortgage on their home.  The F.D.I.C. canceled            the predecessor note and discharged the mortgage.  Under the            new loan agreement, Carmen Elio and FH Financial Services            were to make monthly payments of $7,065.38 beginning in            August, 1991.  Elio defaulted on the monthly payments, and            the F.D.I.C. made a demand under the terms of the loan            agreement.                      By September 1991, Carmen Elio was also in default            on obligations to Boston Trade Bank, and, according to a                                         -4-
                                          4

            verified complaint filed in another action, to Chase            Manhattan Bank for $1,850,000.                      B.   Transfers
                           _________                      On October 25, 1990, Carmen Elio transferred his            interest in residential property in Florida to Elaine and            Teresa Elio, as trustees of the Seaview Realty Trust, for no            consideration.  At the time the equity in the property was            estimated to be more than $1 million.                      On December 31, 1990, Carmen Elio created the Elio            Family Trust, naming Elaine Elio as trustee and his children            as beneficiaries.  Upon creating the trust, Elio transferred            approximately one-half of his interest in FH Securities to            the trust.  Two days later, on January 2, 1991, Elio            transferred the rest of his interest in FH Securities to the            trust.  Elio had valued his total interest in FH Securities            at $843,000.                      Also on January 2, 1991, Carmen Elio assigned his            interest, direct or indirect, in Advantage Health Care Corp.            to the Family Trust.  On a financial statement dated July 15,            1990, he had stated the value of his interest in Advantage at            $3.84 million.3                                
            ____________________            3.  Financial statements signed by Carmen Elio in 1989 and            1990 list a six percent interest in Advantage Health Corp.            valued at $3,840,000.  Elio contends that he never owned any            stock in Advantage, but rather was one of two equal partners            in H.R. Company, which purchased Advantage stock with money            supplied in part by Elio.  Elio claims that on January 2,            1991, he assigned his interest in H.R. Company to the Elio                                         -5-
                                          5

                      In September 1991, Carmen Elio transferred $218,867            to Elaine Elio for no consideration.  The F.D.I.C. also            offered evidence that the Elio Family Trust had paid Chase            Manhattan Bank $104,000 on Carmen Elio's obligations, and had            paid $260,000 directly to Carmen Elio.                 C.   Proceedings below
                      _________________                      The F.D.I.C. initiated a total of three actions            against defendants.  In the first, commenced December 11,            1991 ("Elio I"), the F.D.I.C., as liquidating agent of Boston
                   ______            Trade Bank, sought to recover from Carmen Elio and FH Capital            Group money owed under certain promissory notes and            guaranties.  The district court granted the F.D.I.C.'s            unopposed motion for summary judgment in Elio I and entered
                                                     ______            final judgment against Carmen Elio for $1,257,730.67 and            against FH Capital Group for $59,582.43 on February 2, 1993.                      In the second action, commenced August 27, 1993            ("Elio II"), the F.D.I.C., as liquidating agent for First
              _______            Service, sued Carmen Elio and FH Financial Services on the            three 1988 promissory notes.  The F.D.I.C. later amended this            complaint, adding a claim against Carmen Elio on the 1991            note, and adding fraudulent transfer claims against Elaine            Elio, both individually and as trustee of the Elio Family            Trust and the Seaview Realty Trust, against Teresa Elio as                                
            ____________________            Family Trust, that H.R. Company was subsequently dissolved,            and that a portion of the Advantage shares were transferred            to a nominee for the trust.                                         -6-
                                          6

            trustee of the Seaview Realty Trust, and against FH            Securities.                      The third action, commenced December 9, 1993 ("Elio
                                                                     ____            III"), is an action on the judgment in Elio I, asserting the
            ___                                    ______            same fraudulent transfer claims as Elio II.
                                               _______                      The F.D.I.C. moved in both Elio II and Elio III for
                                                 _______     ________            (1) a preliminary injunction against Carmen Elio and anyone            acting on his behalf, (2) an attachment on the real property            of Carmen and/or Elaine Elio, and (3) appointment of a            trustee to hold the assets of the Elio Family Trust and the            Seaview Realty Trust.  The F.D.I.C. also moved to consolidate            the three cases.                      After holding a hearing on December 21 and 23,            1993, the district court found that the F.D.I.C. had already            proven its right to recover approximately $1.3 million by            virtue of its judgment in Elio I, and was likely to achieve
                                      ______            judgment in excess of $4,780,000 in Elio II.  The court found
                                                _______            that the F.D.I.C. was reasonably likely to succeed in proving            that Carmen Elio had transferred assets to hinder, delay and            defraud the F.D.I.C.  The court also found that the balance            of hardships weighed in favor of granting the equitable            relief sought by the F.D.I.C., and that the public interest            would be served by granting that relief.  The court granted a            preliminary injunction against defendants and those acting in            concert with them; granted an attachment in the amount of $5                                         -7-
                                          7

            million against property held by Carmen and/or Elaine Elio in            Barnstable County, Massachusetts; and appointed a trustee for            the Elio Family Trust and the Seaview Realty Trust.  The            court allowed Carmen and Elaine Elio to pay their ordinary            personal expenses up to $5,000 per month, and allowed FH            Securities and FH Financial Services, with the trustee's            approval, to make payments as reasonably necessary to            continue to conduct business.                      At a further hearing held on February 3, 1994 to            address additional issues relating to the court's order, the            court extended the appointment of the trustee to FH Financial            Services.            II.  Analysis
                 ________                 A.   Appointment of the trustee
                      __________________________                      Defendants argue that the district court abused its            discretion by appointing a trustee to hold the assets of the            Elio Family Trust, the Seaview Realty Trust and FH Financial            Services.  In determining whether the district court abused            its discretion, "[a]n appellate court's role is to decide            whether the district court applied proper legal standards and            whether there was reasonable support for its evaluation of            factual questions."  Hochstadt v. Worcester Found. for
                                 _________    ____________________            Experimental Biology, 545 F.2d 222, 229 (1st Cir. 1976).
            ____________________                                         -8-
                                          8

                      1.   Applicable standard
                           ___________________                      Defendants' contend that the district court failed            to apply the proper standard in appointing the trustee.             Paragraph (18) of 12 U.S.C.   1821(d), entitled "Attachment            of assets and other injunctive relief," provides:                   Subject of [sic] paragraph (19), any court of                 competent jurisdiction may, at the request of--                        (A) the [Federal Deposit Insurance]                      Corporation, (in the Corporation's capacity as                      conservator or receiver for any insured                      depository institution or in the Corporation's                      corporate capacity with respect to any asset                      acquired or liability assumed by the                      Corporation under section 1821, 1822, or 1823                      of this title); . . .                      issue an order in accordance with Rule 65                      of the Federal Rules of Civil Procedure,                      including an order placing the assets of                      any person designated by the Corporation                      or such conservator under the control of                      the court and appointing a trustee to                      hold such assets.            Paragraph (19), entitled "Standards," provides in relevant            part:                      (A) Showing                      Rule 65 of the Federal Rules of Civil                      Procedure shall apply with respect to any                      proceeding under paragraph (18) without                      regard to the requirement of such rule                      that the applicant show that the injury,                      loss, or damage is irreparable and                      immediate.                      Defendants argue that, despite the statute's            references to Rule 65, which governs injunctions, the            appointment of a trustee to hold assets is governed by            stricter standards and precedents applicable to the                                         -9-
                                          9

            appointment of receivers under Rule 66.  See Consolidated
                                                     ___ ____________            Rail Corp. v. Fore River Ry. Co., 861 F.2d 322, 326-27 (1st
            __________    __________________            Cir. 1988) (reciting factors to be considered in appointment            of receivers).  This is so, defendant argues, for three            reasons: (1) there is no material difference between the            trustee authorized by   1821(d)(18) and a "receiver" as            described in Rule 66; (2) the provisions of 28 U.S.C.   959,            which concern the responsibilities and liability of receivers            and trustees, do not distinguish between the two; and (3) the            apparent intent of paragraphs (18) and (19) is to retain the            pre-existing legal standards applicable to such equitable            relief except for the requirement that the injury, loss or            damage be irreparable or immediate.  In making no mention of            Rule 66, defendant concludes, the "drafters evidently            overlooked the fact" that receivers are governed by Rule 66,            not Rule 65.                      We do not agree.  The fact that a trustee is            analogous to a receiver would not prevent Congress from            authorizing the appointment of a trustee upon a lesser            showing.  The statute could not be clearer in its repeated            designation of Rule 65 as the source of the governing            standard.  "[T]he task of interpretation begins with the text            of the statute itself, and statutory language must be            accorded its ordinary meaning."  Telematics Int'l, Inc. v.
                                             ______________________            NEMLC Leasing Corp., 967 F.2d 703, 706 (1st Cir. 1992).
            ___________________                                         -10-
                                          10

                      Even looking at the statutory history, as courts            have sometimes done when interpreting otherwise clear            statutory language, id., that history only militates against
                                ___            defendant's argument.  Paragraphs (18) and (19) were enacted            in 1990 as part of the Comprehensive Thrift and Bank Fraud            Prosecution and Taxpayer Recovery Act, passed by Congress in            response to the crisis in the nation's depository            institutions.  The Act                      responds to the public outcry to put to                      justice those who defrauded the savings                      and loan industry by providing Federal                      regulating agencies, Federal prosecutors,                      and law enforcement agencies with                      additional tools to combat fraud and                      abuse affecting financial                      institutions. . . . is aimed at                      protecting assets from wrongful                      disposition, expands the authority of the                      Attorney General, conservators, receivers                      or liquidating agents and Federal banking                      agencies to enjoin the dissipation of                      assets wrongfully obtained. . . . [and]                      further expands the power of                      conservators, receivers or liquidating                      agents to avoid fraudulent                      transfers. . . .            136 Cong. Rec. E3684 (daily ed. Nov. 2, 1990) (statement of            Rep. Schumer).  "By enacting the Taxpayers Recovery Act,            Congress has evidenced its desire to take an aggressive            position in minimizing losses sustained by taxpayers due to            bank failures . . . . Congress has given the FDIC a green            light to use aggressive tactics in protecting taxpayers'            interests."  F.D.I.C. v. Cafritz, 762 F. Supp. 1503, 1509
                         ________    _______            (D.D.C. 1991).  See also Resolution Trust Corp. v. Cruce, 972
                            ________ ______________________    _____                                         -11-
                                          11

            F.2d 1195, 1200 (10th Cir. 1992) ("Congress clearly intended            to reduce the RTC's burden    vis a vis other litigants in            similar situations    when it seeks to freeze assets that            allegedly are the subject of a fraudulently [sic]            conveyance.").  Providing for the appointment of a trustee            under the standards of Rule 65 fits within this purpose.             Where a statute's plain language was consonant with its            apparent purpose, we have said that we would not find in it a            meaning "nowhere suggested by the explicit language of the            statute itself."  Telematics, 967 F.2d at 706-07.
                              __________                      We conclude that the appointment of a trustee under            12 U.S.C.   1821(d)(18) is governed by the standards and            precedents applicable to the issuance of injunctive relief            under Rule 65, except that there is no need for plaintiff to            show that the injury, loss or damage will be irreparable or            immediate.  To justify the appointment of a trustee to hold            the assets of defendants, the F.D.I.C. was, therefore,            required to show (1) that it will suffer some injury in the            absence of the appointment of a trustee; (2) that such injury            outweighs any harm which appointment of the trustee would            inflict on the defendant; (3) that the F.D.I.C. has exhibited            a likelihood of success on the merits; and (4) that the            public interest will not be adversely affected by the                                         -12-
                                          12

            appointment of the trustee.  See Planned Parenthood League v.
                                         ___ _________________________            Bellotti, 641 F.2d 1006, 1009 (1981).4
            ________                      2.   Reasonableness of the court's factual findings
                           ______________________________________________                      Defendants argue that there was no reasonable            support for the district court's conclusions that (1) the            F.D.I.C. was likely to succeed on the merits of its claims,            (2) the F.D.I.C. would suffer harm in the absence of the            appointment of the trustee, and (3) the balance of harms            favored the F.D.I.C.5                           a.   Likelihood of success on the merits
                                ___________________________________                      The F.D.I.C. brings its claims against the Elio            Family Trust and the Seaview Realty Trust to avoid fraudulent            transfers under 12 U.S.C.   1821(d)(17).  To succeed on such            claims, the F.D.I.C. must show that the transfer was made by            the debtor of the financial institution within five years of                                
            ____________________            4.  The F.D.I.C. ignores the first of these four prongs               that some showing of harm be made    in the formulation            argued to us.  Perhaps it feels that such a requirement is            implicit in the second prong, that the balance of harms            supports the party requesting relief.  We agree with the            Tenth Circuit, in any case, that 12 U.S.C.   1821(d)(19) does            not completely eliminate the requirement that "some showing            of injury" be made.  Cruce, 972 F.2d at 1200.  See also 136
                                 _____                     ________            Cong. Rec. E3686 (statement of Rep. Schumer) (daily ed., Nov.            2, 1990) ("Congress still intends that the Corporation be            required to make some showing of injury prior to obtaining            relief").  But see Cafritz, 762 F. Supp. at 1505-06.
                       _______ _______            5.  Defendants also argue that, under the standards and            precedents governing the appointment of receivers under Rule            66, the F.D.I.C. was required to show that it had a legal or            equitable right in the defendants' property, and that it            failed to do so here.  Because we hold that those standards            do not apply, we do not address this argument.                                         -13-
                                          13

            the F.D.I.C.'s appointment as conservator or receiver, and            that that debtor "voluntarily or involuntarily made such            transfer or incurred such liability with the intent to            hinder, delay, or defraud the insured depository institution,            the Corporation or other conservator, or any other            appropriate Federal banking agency."  12 U.S.C.              1821(d)(17)(A).                      Because direct evidence of fraudulent intent is            often lacking, courts may have to rely on inferences "from            the circumstances surrounding a transaction, placing            particular emphasis on certain indicia or badges of fraud."             F.D.I.C. v. Anchor Properties, 13 F.3d 27, 32 (1st Cir.
            ________    _________________            1993).  Such indicia may commonly include, without            limitation,                      (1) actual or threatened litigation                      against the debtor; (2) a purported                      transfer of all or substantially all of                      the debtor's property; (3) insolvency or                      other unmanageable indebtedness on the                      part of the debtor; (4) a special                      relationship between the debtor and the                      transferee; and (5) retention by the                      debtor of the property involved in the                      putative transfer.            Id. "[T]he confluence of several [indicia or badges of fraud]
            ___            can constitute conclusive evidence of an actual intent to            defraud, absent 'significantly clear' evidence of a            legitimate supervening purpose."  Max Sugarman Funeral Home,
                                              __________________________            Inc. v. A.D.B. Investors, 926 F.2d 1248, 1253-54 (1st Cir.
            ____    ________________            1991).                                         -14-
                                          14

                      Here, the evidence amply supported the district            court's finding that the F.D.I.C. was likely to succeed on            the merits of its fraudulent transfer claims against the Elio            Family Trust and the Seaview Realty Trust.  The transfers            were made in late 1990 and 1991.  The evidence indicated that            by the end of 1990, Carmen Elio was more than $6 million in            debt, of which approximately $4.5 million was in default, and            that by September 1991 he was also in default on obligations            to Boston Trade Bank.  There was evidence that these debts            remained in default, with interest accruing, and that            judgment subsequently entered for $1,257,730.67 on the            F.D.I.C.'s action as liquidating agent of Boston Trade Bank.             The district court could thus reasonably have found            unmanageable indebtedness on Elio's part at the time of the            transfers, and could reasonably have inferred that Elio would            have been aware that litigation would inevitably follow.                      It is unquestioned that the transferees had a            special relationship with Carmen Elio.  The two trusts were            both created by Elio; family members served as the trustees            of both; his children were the beneficiaries of the Elio            Family Trust.6  Nor do defendants dispute that the transfers            were made for no consideration.                                
            ____________________            6.  The record was silent as to the beneficiaries of the            Seaview Realty Trust.                                         -15-
                                          15

                      The court supportably found that the transfers to            the trusts were not for legitimate tax planning purposes.             Michael Davis, the tax attorney who had prepared the            instruments establishing the Elio Family Trust, testified            that, although he understood that the trust was being            established for tax purposes and was aware of the initial            transfer of approximately half of the FH Securities stock to            the trust, Carmen Elio did not inform him of the transfer of            the remaining stock only two days later.  Davis also            testified that he was not consulted on or aware of any            subsequent transfers to the trust.  His testimony also            indicated that the stock transfers far exceeded the amount            that would have been exempt under the gift tax annual            exclusion.  Davis speculated that the additional amount could            have had other beneficial tax consequences, but conceded that            the financial information provided to him by Carmen Elio was            insufficient for him to know whether beneficial consequences            would occur.  Davis testified that he did not recall having            seen Elio's 1989 or 1990 tax returns, was unaware to what            extent Elio had made any prior gifts that would affect the            level of his lifetime gift tax exemption, was not consulted            with respect to payment of any gift tax on the transfers to            the trust, and was unaware of Elio's transfer of property to            the Seaview Realty Trust.  The district court reasonably            concluded that although counsel formed the trust for                                         -16-
                                          16

            conventional gift tax purposes, Carmen Elio had not provided            counsel with full and accurate financial information and            immediately used the trust as a means to hinder, delay and            defraud his creditors.                      The record supports the finding that Carmen Elio            continued to enjoy the benefits of the property even after            the transfers were made.  There was evidence that the Elio            Family Trust made payments on Elio's obligation to Chase            Manhattan Bank, and that the trust paid $260,000 directly to            Elio;7 there was also evidence that, even after the Florida            property was transferred to the Seaview Realty Trust, Elaine            Elio stated that the property was her "winter residence,"            from which the court reasonably inferred that Carmen Elio had            use of the property as well.                      The record supports the district court's finding            that Carmen Elio had in the past made false statements            regarding his financial condition.  His financial statement            given to Chase Manhattan Bank on December 31, 1989, did not            disclose his debt to Boston Trade Bank or the full amount of            his debt to First Service.  His financial statement given to                                
            ____________________            7.  Monthly statements of the Elio Family Trust's account            show numerous other unexplained transactions, some in large            amounts.  After the trustee had been appointed and made its            initial report under seal to the court, the court noted on            the record that the report showed substantial payments made            by the trust which did not appear to be for the benefit of            the beneficiaries, concluding that "if the FDIC had known            about them, they would have emphatically used them in their            earlier argument."                                         -17-
                                          17

            Boston Trade Bank on July 15, 1990 did not disclose any of            the debt then owed to First Service.  Nor, the district court            reasonably inferred, had Elio told Attorney Davis of the            extent of his substantial debt.                      As to the proportion of Carmen Elio's property that            he had transferred, the district court reasonably found that            Elio's own statements on his previous financial statements            were not credible, and that there was no evidence of any            property other than that which had been transferred.                      Given the evidentiary support for these several            "badges of fraud," the district court reasonably concluded            that the F.D.I.C. was likely to succeed on the merits of its            claims against the two trusts.                      The F.D.I.C. also sues FH Financial Services on its            obligation under the $564,619.35 loan agreement executed July            1, 1991.  There is sufficient evidence in the record to show            that FH Financial Services undertook this obligation and is            currently in default on it.  Defendants do not claim            otherwise and offer no defense.  As a result, the district            court was entitled to find that the F.D.I.C. would succeed on            the merits of its claim against FH Financial Services.                      b.   Some showing of harm
                           ____________________                      The record supports the district court's conclusion            that the F.D.I.C. would be harmed if no trustee were            appointed    specifically, that the F.D.I.C.'s ability to                                         -18-
                                          18

            fulfill its statutory objective of collecting on the assets            of the failed banks would be impaired.  There was evidence            that assets of the Elio Family Trust had been expended on            Carmen Elio's behalf, and that Elio had continued to enjoy            the benefit of the assets transferred to the Seaview Realty            Trust, thus permitting the inference that the assets of the            trusts were still within Elio's control.  The district court            also reasonably found that the F.D.I.C. had been frustrated            in its attempts to obtain discovery with respect to the            assets of the two trusts and of FH Financial Services,8 and            with respect to the merits.  The district court reasonably            found that the information previously provided by Carmen Elio            himself as to their assets was not credible.                      At the hearing on February 3, 1994, the court heard            representations of counsel that FH Financial Services had            once been owned by Carmen Elio, that it may subsequently have            been transferred to one of Elio's children, that its present            ownership was unknown, that its only known asset was a third            mortgage on the Elios' home in Osterville, Massachusetts,                                
            ____________________            8.  In response to Carmen Elio's statement in an affidavit            that the Florida property had been damaged in a hurricane and            foreclosed upon, counsel for the F.D.I.C. stated, "My            question is:  Does the Seaview Realty Trust have other            assets?  What happened when it was foreclosed?  Who            foreclosed it?  What were the proceeds of the foreclosure?             Was there an insurance policy payable?  Was the loss payee            the mortgagee if Hurricane Andrew damaged it?  There are a            lot of questions about the Seaview Realty Trust which aren't            dissolved by that terse statement that the property was            damaged by Hurricane Andrew and has been foreclosed."                                         -19-
                                          19

            that the current state of its business was unknown, and that            the F.D.I.C. still sought discovery from it.  The court            extended the appointment of the trustee to FH Financial            Services to verify its assets and ensure its compliance with            the court's earlier order.  As there was a void of            information concerning FH Financial Service's business,            assets and ownership, the court could reasonably have found            that without the extension of the trustee to FH Financial            Services, the F.D.I.C.'s ability to protect its rights and            pursue its claim would be impaired.                      We hold that there is ample evidence of harm in the            record to satisfy the reduced standard required by 12 U.S.C.              1821(d)(18) and (19).                      c.   Balance of harms
                           ________________                      Finally, the record supports the district court's            conclusion that the balance of harms weighed in the            F.D.I.C.'s favor.  Defendants' contention that the            appointment of a trustee would jeopardize the Elio Family            Trust's license to sell securities was rejected by the            district court and is not pursued on appeal.  Defendants cite            only the costs of trusteeship itself and the deprivation of            ongoing control over their property as sources of harm.             Though these harms are not negligible, the district court did            not abuse its discretion in finding that they were outweighed            by the potential harm to the F.D.I.C.'s ability to protect                                         -20-
                                          20

            the assets of the failed banks.  Moreover, because the            likelihood of plaintiff's ultimate success on the merits is            great, "less weight is to be given to the defendant's            prospective loss."  S.E.C. v. World Radio Mission, Inc., 544
                                ______    _________________________            F.2d 535, 541-42 (1st Cir. 1976).                 B.   Preliminary injunction against Elaine Elio
                      __________________________________________                      The district court enjoined the defendants and            those acting in concert with them from "selling,            transferring, hypothecating, encumbering or otherwise            alienating any assets or property," specifically allowing            Carmen and Elaine Elio individually to pay their ordinary            personal expenses up to $5,000 per month.  The district court            emphasized that he had found Elaine Elio to be "acting in            concert" with Carmen Elio, that she would have been subject            to the order even if not explicitly named, and that she was            named in the order primarily to put her on notice and            "minimize the risk that someone would inadvertently do            something that will make them the subject for a motion for            civil contempt by the F.D.I.C."                      Defendants argue that the district court abused its            discretion in granting a preliminary injunction against            Elaine Elio individually, because (1) there was no support            for a finding that she was acting in concert with Carmen            Elio, and (2) the amount of the injunction should have been                                         -21-
                                          21

            limited to the amount of the allegedly fraudulent transfer            that she received from Carmen Elio.                      But the evidence of Elaine Elio's involvement, was            not limited merely to her receipt of $218,867 from Carmen            Elio in September 1991.  Elaine Elio was the trustee of the            Elio Family Trust, which was the recipient of substantial            transfers from Carmen Elio on at least three occasions, and            which subsequently made two transfers to Carmen Elio or on            his behalf.  She was also a trustee of the Seaview Realty            Trust.  Seaview was the recipient of Florida residential            property from Carmen Elio, which the court reasonably            inferred could continue to be used by Carmen Elio after the            transfer.  In addition, Elaine Elio refused at her deposition            to answer any questions about her involvement, asserting her            Fifth Amendment privilege against self-incrimination.  As            this is a civil action, the district court was entitled to            draw a negative inference from her refusal to testify.             Baxter v. Palmigiano, 425 U.S. 308, 318 (1976).  We conclude
            ______    __________            there was reasonable support in the record for the district            court's finding that Elaine Elio was acting in concert with            Carmen Elio in his attempts to hinder, delay and defraud his            creditors, and that a preliminary injunction was necessary to                                         -22-
                                          22

            prevent further dissipation of Elio's assets.9  See Fed. R.
                                                            ___            Civ. P. 65(d).                      Nor was the scope of the injunction an abuse of            discretion.  Despite the district court's repeated            invitation, Elaine Elio refused to provide information            regarding the state and source of her assets, or to identify            any assets which she had acquired independently from Carmen            Elio.  Defendants' assertion that Elaine Elio "may very well            have" independent assets was unsupported by any evidence.             The district court repeatedly offered to reconsider its order            if such evidence were provided; none was.  From her refusal            to testify regarding the source of her assets, and from the            other evidence of her acting in concert with Carmen Elio to            defraud creditors, the court could have inferred a likelihood            that there had been additional transfers in unknown amounts.             Moreover, to enjoin her, in the abstract, from dissipating            only those assets received from Carmen Elio would have been            an ineffective directive subject to easy evasion, leaving the            court with little ability to distinguish a valid expenditure                                
            ____________________            9.  Defendants argue that the district court erroneously            found that Elaine Elio was Carmen Elio's "alter ego," thereby            inappropriately applying a principle of corporations to a            relationship between two individuals.  It is clear from the            record, however, that the district court used the term "alter            ego" not as a term of art but rather as synonymous with            "acting in concert"; the court used the latter phrase several            times, including in the December 27, 1993 order.  Moreover,            the court specifically clarified this issue, citing to Rule            65, on the record at the February 3, 1994 hearing.                                         -23-
                                          23

            from an invalid one.  Given the failure of defendants to            provide information on the basis of which the district court            might have meaningfully modified its order, it was not an            abuse of discretion to enjoin Elaine Elio from spending more            than $5,000 per month.  See F.D.I.C. v. Faulkner, 991 F.2d
                                    ___ ________    ________            262, 267 (5th Cir. 1993); F.S.L.I.C. v. Dixon, 835 F.2d 554,
                                      __________    _____            566 (5th Cir. 1987).                 C.   Attachment on Elaine Elio's property
                      ____________________________________                      The district court ordered an attachment in the            amount of $5 million on the real property of Carmen and/or            Elaine Elio in Barnstable County, Massachusetts.  Echoing            their arguments with respect to the preliminary injunction,            defendants argue that the attachment, as it applies to Elaine            Elio, was an abuse of discretion.                      Unlike preliminary injunctions and receiverships,            however, attachments are not among the interlocutory orders            appealable under 28 U.S.C.   1292(a).  Defendants concede            that interlocutory orders granting attachments are not            ordinarily appealable, see In re Unanue Casal, 998 F.2d 28,
                                   ___ __________________            31-32 (1st Cir. 1993); Lowell Fruit Co. v. Alexander's
                                   ________________    ___________            Market, Inc., 842 F.2d 567, 568-70 (1st Cir. 1988), but
            ____________            briefly argue that the rule should not apply here because the            attachment is integrally related to the other orders, is            based on the same findings of fact, and will not waste            judicial resources.  Defendants cite no statute or precedent                                         -24-
                                          24

            in support of this argument, nor do defendants attempt to            show that the attachment is appealable under the collateral            order doctrine.  See Cohen v. Beneficial Indus. Loan Corp.,
                             ___ _____    ____________________________            337 U.S. 541, 545-47 (1949)10.  In these circumstances, we            decline to review the attachment order.  Cf. In re Unanue
                                                     ___ ____________            Casal, 998 F.2d at 31-32; Lowell Fruit, 842 F.2d at 568-70;
            _____                     ____________            Sobol v. Heckler Congressional Comm., 709 F.2d 129, 130-32
            _____    ___________________________            (1st Cir. 1983) (order dissolving attachment); Midway Mfg.
                                                           ___________            Co. v. Omni Video Games, Inc., 668 F.2d 70, 71 (1st Cir.
            ___    ______________________            1981) (order vacating impoundment order).                      Affirmed.
                      ________                                
            ____________________            10.  We question whether such a showing could be made.  Under            the collateral order doctrine, the order appealed from "must            be a final order that presents an issue of law, not one of            discretion, that is separable from the issues to be presented            at trial, and that cannot await resolution until appeal from            the final judgment because irreparable harm would be            probable."  Midway Mfg. Co. v. Omni Video Games, Inc., 668
                        _______________    ______________________            F.2d 70, 71 (1st Cir. 1981).  Here, the validity of the            attachment order is by no means separable from the merits of            the F.D.I.C.'s fraudulent conveyance claims, and it "may well            involve only a fact-specific exercise of discretion rather            than a controlling issue of law."  Bridge Constr. Corp. v.
                                               ____________________            City of Berlin, 705 F.2d 582, 583 (1st Cir. 1983).  In
            ______________            addition, given that the attachment of Carmen Elio's interest            in this same property was not challenged, it appears unlikely            that Elaine Elio will suffer any irreparable harm from the            attachment on her interest.                                         -25-
                                          25