Appellate Case: 23-4116 Document: 57-1 Date Filed: 11/15/2024 Page: 1
FILED
United States Court of
PUBLISH Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
November 15, 2024
FOR THE TENTH CIRCUIT Christopher M. Wolpert
_________________________________ Clerk of Court
JONATHAN O. HAFEN, in his
capacity as Court-Appointed Receiver,
Plaintiff - Appellee,
v. No. 23-4116
GRETCHEN A. HOWELL, an
individual; LESLIE M. HOWELL, an
individual,
Defendants - Appellants.
_________________________________
Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:19-CV-00813-TC)
_________________________________
Matthew M. Boley, Cohne Kinghorn, P.C., Salt Lake City, Utah, for
Defendants-Appellants.
Jeffrey A. Balls (Joseph M.R. Covey and Matthew J. Ball, with him on the
brief), Parr Brown Gee & Loveless, Salt Lake City, Utah, for PlaintiffAppellee.
_________________________________
Before HARTZ, PHILLIPS, and EID, Circuit Judges.
_________________________________
PHILLIPS, Circuit Judge.
_________________________________
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Lured by the promise of a secure and exclusive investment opportunity,
Les and Gretchen Howell made substantial investments in the Silver Pool, a
silver-trading scheme operated by Gaylen Rust through his business, Rust Rare
Coin. Though Gretchen was about $75,000 short of recovering her investment
when the government shut down the scheme, Les did far better. After about ten
years of investing, he profited about $3.2 million above his roughly $1.2
million investment. He took his distributions and bought land in Kingman,
Arizona. There, he built a house where he lives with Gretchen. Though we are
uncertain when he did so, Les made Gretchen a joint tenant with himself,
gifting her a one-half share in the property.
About a decade after Les began investing, the Silver Pool and Rust Rare
Coin were exposed as a Ponzi scheme. The Commodity Futures Trading
Commission (“CFTC”) brought an enforcement action against the operator of
the scheme, Gaylen Rust, and the district court appointed Jonathan O. Hafen as
receiver to recover assets fraudulently transferred through the scheme.
As the receiver, Hafen brought this ancillary action against Les and
Gretchen under Utah’s Uniform Voidable Transactions Act (“UVTA”), seeking
to recover the $3.2 million in profit that Les made from the scheme, by
asserting claims of fraudulent transfer and unjust enrichment. The district court
granted Hafen summary judgment against Les and Gretchen on the fraudulent-
transfer claims. It declined to reach the unjust-enrichment claims because the
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fraudulent-transfer ruling gave Hafen complete relief. The district court entered
a judgment against Les and Gretchen for Les’s profit. The judgment noted that
it included the funds Les transferred to Gretchen by giving her joint title in the
Kingman property.
Both parties filed motions under Federal Rule of Civil Procedure 59(e).
Hafen sought prejudgment interest, which the district court granted at a 5%
interest rate. The Howells sought reconsideration of the summary-judgment
order and clarification on the scope of Gretchen’s liability. The district court
denied the Howells’ motion, but clarified that Gretchen was liable for half the
$3 million that Les spent on the Kingman property. Consistent with those
orders, the district court entered an amended judgment that awarded Hafen
prejudgment interest and clarified that Gretchen was liable for $1.5 million of
the total money judgment.
The Howells appeal the district court’s grant of summary judgment to
Hafen, the calculation of the judgment against each of them, and the award of
prejudgment interest to Hafen. Exercising our appellate jurisdiction under 28
U.S.C. § 1291, 1 we agree that the district court erred in calculating the
1
Our subject-matter jurisdiction derives from the CFTC enforcement
action, which was brought under the Commodities Exchange Act. See 7 U.S.C.
§ 13a-1; see also Commodity Futures Trading Comm’n v. Rust Rare Coin, No.
(footnote continued)
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judgment against Gretchen, so we reverse and remand for further proceedings
to recalculate the amount of the judgment against her. We otherwise affirm the
district court.
BACKGROUND
I. Factual Background
Promising substantial and consistent returns, Gaylen Rust, the owner and
operator of Rust Rare Coin, lured investors to put their money in a silver-
trading Ponzi scheme that he called “the Silver Pool.” 2 To explain his success,
he represented that he had created an algorithm that allowed him to trade silver
profitably whether the market was up or down. And to placate any investors’
concerns, he claimed he traded only one-half of the silver at a time and stored
the rest of the silver at a Brink’s storage facility. Of course, nearly all this story
was a lie. In fact, the Silver Pool was insolvent. An investigation revealed that
2:18-CV-892-TC-DBP, at 6 ¶ 9 (D. Utah Dec. 6, 2018) (ECF No. 56). A
receiver appointed in such an action may bring ancillary state-law claims in
federal court against individuals alleged to have received unlawful transfers. 28
U.S.C. §§ 754, 1367(a); Klein v. Cornelius,
786 F.3d 1310, 1315 (10th Cir.
2015) (federal courts have jurisdiction over ancillary state-law claims); see
Klein v. Roe,
76 F.4th 1020, 1029 (10th Cir. 2023) (receiver has standing to
recover fraudulent transfers).
2
The parties’ briefing and the district court’s memorandum opinion use
the names Rust Rare Coin and the Silver Pool interchangeably. The record
reveals that Rust was running a few schemes through Rust Rare Coin but
eventually consolidated them in the Silver Pool. This opinion generally matches
the naming convention used in the parties’ briefing and the district court’s
memorandum opinion.
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Gaylen Rust never traded or stored silver, and that the Silver Pool generated no
revenue. Instead, Rust was churning the new investments to pay returns to
earlier investors, the hallmark of a Ponzi scheme. 3
Two of Rust’s investors were Les and Gretchen Howell. Throughout their
twenty-five years of marriage, the couple kept their finances separate; they
invested in the scheme separately too. Beginning in 2008 and continuing for
around a decade, Les invested nearly all his assets into Rust Rare Coin. All
told, he invested about $1.2 million in the scheme, and he received about $3.2
million in profits. See Hafen v. Howell, No. 2:19-CV-00813-TC-DAO, 2023
WL 2188566, at *11–12 (D. Utah Feb. 23, 2023). These gains enabled Les to
retire early from his job, buy land in Kingman, Arizona, and begin building a
house there. He spent at least $3 million of his distributions from the scheme to
buy the land and to build the house.
Soon after Les began investing in Rust Rare Coin, Gretchen did so too,
investing $96,450 into the scheme. But the scheme ended with her having
received just $22,000 in distributions, resulting in a $74,450 loss. Though she
3
“Ponzi schemes are fraudulent business ventures in which investors’
returns are generated by capital from new investors rather than the success of
the underlying business venture. This results in a snowball effect as the creator
of the Ponzi scheme must then recruit even more investors to perpetuate the
fraud.” Georgelas v. Desert Hill Ventures, Inc., 45 F.4th 1193, 1195 n.1 (10th
Cir. 2022) (internal quotation marks omitted).
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was a “net loser” in the scheme, Les gave her joint title in the Kingman
property, and the couple has lived in the home since 2018.
II. Procedural Background
In November 2018, the CFTC and the State of Utah filed a complaint
against Gaylen Rust and others, alleging that Rust Rare Coin had defrauded
investors. Commodity Futures Trading Comm’n v. Rust Rare Coin, No. 2:18-
CV-00892-TC-DBP (D. Utah Nov. 13, 2018) (ECF No. 1). 4 Soon after, the
court appointed Jonathan Hafen as receiver for Rust Rare Coin. Hafen is
responsible for preserving the assets of the estate, including by clawing back
funds fraudulently transferred.
In May 2019, a federal grand jury returned an indictment charging
Gaylen Rust for his role in the scheme to defraud investors through Rust Rare
Coin. See United States v. Rust, No. 2:19-CR-00164-TS-CMR-1 (D. Utah May
8, 2019) (ECF No. 1). In December 2021, Rust pleaded guilty, admitting that
the Silver Pool was a fraudulent scheme.
In October 2019, Hafen filed this ancillary action, seeking to recover
funds transferred to the Howells. In the complaint, he asserted two claims
against Les and Gretchen: fraudulent transfer and unjust enrichment, and
moved for summary judgment. The district court granted Hafen summary
We can take judicial notice of publicly filed court records. See United
4
States v. Ahidley, 486 F.3d 1184, 1192 n.5 (10th Cir. 2007).
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judgment on the fraudulent-transfer claim. See Hafen, 2023 WL 2188566, at
*12–13. Because those claims gave Hafen complete relief, the court chose not
to reach the unjust-enrichment claims. See
id. at *13 n.22.
The district court entered judgment against Les and Gretchen for
$3,218,103.96, Les’s total “net profits.” 5 The court noted that the judgment
“includes the funds . . . transferred to Gretchen . . . by titling their Kingman,
Arizona property in her name as well as his own, which Gretchen . . . must
disgorge.”
Both parties moved to amend or alter the judgment under Rule 59(e).
Hafen sought prejudgment interest, which the district court granted. See Hafen
v. Howell, No. 2:19-CV-00813-TC, 2023 WL 5000944, at *5–7 (D. Utah Aug.
4, 2023). Gretchen sought clarification on whether the judgment against her
was a money judgment or was instead a judgment against her interest in the
Kingman property. The district court denied their Rule 59(e) motion but
clarified that the judgment against Gretchen was a money judgment for $1.5
million, that is, half of Les’s fraudulent earnings that he spent on the Kingman
property. See
id. at *3–5. The Howells timely appealed the amended judgment.
5
Though not detailed in the district court’s memorandum opinion, that
figure discounts Gretchen’s loss: $4,511,000 (Les’s distributions) -
$1,218,446.04 (Les’s investment) - $74,450 (Gretchen’s loss) = $3,218,103.96.
See Hafen, 2023 WL 2188566, at *11–12.
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DISCUSSION
Across their seven appellate issues, the Howells challenge nearly every
aspect of the district court’s orders and judgments. 6 Those seven issues are as
follows:
1. Whether the Ponzi presumption is valid under Utah law;
2. Whether the district court relied on inadmissible evidence to grant
Hafen summary judgment;
3. Whether the district court erred in denying Les’s claim for
prejudgment interest;
4. Whether the district court erred in finding Les’s transfer of a one-half interest in the Kingman property to Gretchen was voidable
under Utah’s Uniform Voidable Transactions Act (“UVTA”);
5. Whether the district court erred in finding that Les’s investment in
the Kingman property was recoverable through Gretchen;
6
The Howells also argue that disputed facts preclude summary judgment
on the unjust-enrichment claim. But the district court reserved ruling on those
claims, so that argument is not before us. The district court did so because
Hafen received complete relief through the fraudulent-transfer claims, and an
unjust-enrichment claim under Utah law generally provides a remedy where one
does not exist at law. Hafen, 2023 WL 2188566, at *13 n.22; see Bivens v. Salt
Lake City Corp.,
416 P.3d 338, 350–51 (Utah 2017). Though the district court
left those unjust-enrichment claims undecided, we still have appellate
jurisdiction under
28 U.S.C. § 1291 because the order finally disposed of the
case such that it is not subject to further proceedings in federal court. Jackson
v. Volvo Trucks N. Am., Inc.,
462 F.3d 1234, 1238 (10th Cir. 2006). And the
court clearly understood the judgment to resolve all issues before the court,
treating the unjust-enrichment claim as being mooted by the judgment on the
fraudulent-transfer claim.
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6. Whether there was sufficient evidence to support the $1.5 million
judgment against Gretchen; and
7. Whether the district court erred in granting Hafen’s motion to
amend the judgment with an award of prejudgment interest.
We agree with the Howells that the district court erred in entering judgment
against Gretchen for $1.5 million. Rather than rely on the value of the property
when it was transferred to Gretchen, the court relied on the $3 million that Les
had invested in the property, in which Gretchen never had an interest. But we
disagree with the Howells on their other arguments. So we reverse and remand
for further proceedings to determine the value of Gretchen’s interest in the
Kingman property when it was transferred to her. We otherwise affirm the
district court.
I. Validity of the Ponzi Presumption
Utah law generally allows a creditor to void a debtor’s transfer if the
creditor can show that the transfer was fraudulent. As is relevant here, under
the UVTA, the general rule is that a creditor can void a debtor’s transfer by
showing by a preponderance of the evidence that the debtor made the transfer
(1) “with actual intent to hinder, delay, or defraud any creditor of the debtor”
or (2) “without receiving a reasonably equivalent value in exchange for the
transfer or obligation.” Utah Code Ann. § 25-6-202(1), (3) (West 2024). But
even if a debtor makes a transfer with an actual intent to defraud a creditor, the
transfer is not voidable against the recipient if the recipient shows by a
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preponderance of the evidence that he took the transfer (1) “in good faith” and
(2) “for a reasonably equivalent value.” Id. § 25-6-304(1), (10).
But if a creditor (or in this case the receiver, who stands in the creditor’s
shoes) can show that the debtor operated a Ponzi scheme, the law presumes the
debtor’s transfers were fraudulent. Georgelas v. Desert Hill Ventures, Inc., 45
F.4th 1193, 1197 (10th Cir. 2022). This is known as the “Ponzi presumption.” 7
Id. at 1198. A Ponzi scheme is a fraudulent enterprise that generates no revenue
but gives its investors the appearance of legitimacy by paying returns with new
investors’ money. To keep the Ponzi scheme going, its operator must keep
recruiting new, unwitting investors.
Id. at 1195 n.1.
Before the district court, Hafen argued that the Silver Pool was a Ponzi
scheme, making all the transfers to Les and Gretchen presumed fraudulent. The
district court agreed, finding no genuine dispute of material fact about whether
the Silver Pool was a Ponzi scheme. So the court applied the Ponzi presumption
and presumed that all distributions to Gretchen and Les were fraudulent. Hafen,
2023 WL 2188566, at *8–9, *12. Les and Gretchen rebutted that presumption
for the distributions they received that did not exceed their initial investment
7
Though many states apply the presumption to their uniform act, see,
e.g., Lewis v. Taylor, 375 P.3d 1205, 1208 (Colo. 2016); Ritchie Cap. Mgmt.,
LLC v. Stoebner,
779 F.3d 857, 862 n.6 (8th Cir. 2015) (collecting cases), at
least two states have declined to apply the presumption to their uniform act,
Finn v. All. Bank,
860 N.W.2d 638, 647 (Minn. 2015); Janvey v. Golf Channel,
Inc.,
487 S.W.3d 560, 581 (Tex. 2016).
10
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(about $1.2 million for Les and $22,000 for Gretchen), because those
distributions were exchanged for reasonably equivalent value. Id. at *11–12;
§ 25-6-202(1).
Before us, the Howells argue that the UVTA’s language precludes a
Ponzi presumption. At oral argument, they represented that this was a question
of first impression because we have applied the Ponzi presumption only to the
UVTA’s predecessor, Utah’s Uniform Fraudulent Transfer Act (“UFTA”). But
as they conceded at oral argument, they did not challenge the validity of the
presumption before the district court because they thought the district court
would find the argument unpersuasive. In other words, they argue this point for
the first time on appeal and we consider it waived. Richison v. Ernest Grp. Inc.,
634 F.3d 1123, 1127 (10th Cir. 2011) (concluding that a party waives an issue
by “intentionally relinquish[ing] or abandon[ing]” it).
But we will clarify that this would not be a question of first impression if
it were properly raised. When confronted in the past with whether our UFTA-
Ponzi-presumption case law applies to the UVTA, we have assumed it does
without saying so. For example, in a recent published decision, we described
one of our UFTA decisions applying the Ponzi presumption as a UVTA case.
See Klein v. Roe, 76 F.4th 1020, 1032 n.6 (10th Cir. 2023). And in an
unpublished decision, we affirmed the application of the Ponzi presumption to a
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UVTA case like this one. See Klein v. Shepherd, No. 21-4064, 2023 WL
4542160, at *2, *7 (10th Cir. July 14, 2023).
So we make it clear that our UFTA case law applying the Ponzi
presumption extends to the UVTA. Though the UVTA added language
regarding the creditor’s burden to prove the elements of a claim and a third-
party transferee’s burden to prove an affirmative defense, the Ponzi
presumption depends on transfers being made with an actual intent to defraud.
Compare Utah Code Ann. § 25-6-5 (West 2016), with
id. § 25-6-202(3) (West
2024), and id. § 25-6-6 (West 2016), with id. § 25-6-203(3) (West 2024); see
Klein v. Cornelius,
786 F.3d 1310, 1320 (10th Cir. 2015). And the UVTA
preserved that requirement. Compare § 25-6-5(1)(a) (West 2016), with § 25-6-
202(1)(a) (West 2024).
II. The Howells’ Evidentiary Arguments
The Howells argue the district court relied on inadmissible evidence in
granting Hafen summary judgment. The Howells challenge the court’s reliance
on Gaylen Rust’s statements and the evidentiary submissions from three
witnesses. “We review a district court’s evidentiary determinations when
resolving a motion for summary judgment—including the decision to treat
submissions as competent evidence—for an abuse of discretion.” Vette v. K-9
Unit Deputy Sanders, 989 F.3d 1154, 1163 (10th Cir. 2021). That includes the
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admission or exclusion of expert testimony. Vincent v. Nelson, 51 F.4th 1200,
1212–13 (10th Cir. 2022).
A. Gaylen Rust’s Statements
Before Gaylen Rust pleaded guilty to conspiracy to commit wire fraud,
conspiracy to commit money laundering, and securities fraud, he spoke with
investigators, law enforcement, and the sentencing court about how he operated
Rust Rare Coin. The reports and declarations submitted in support of Hafen’s
motion for summary judgment quote some of those statements. Before us, the
Howells argue that Rust’s statements are inadmissible hearsay and that the
district court erred by relying on them.
Though the district court found that Rust’s statements “confirmed” its
finding that the Silver Pool operated as a Ponzi scheme, it noted that it didn’t
need Rust’s statements to make that finding. Hafen, 2023 WL 2188566, at *10
(“But even without the information from Mr. Rust’s statements—either as they
are included in the Receiver’s experts reports and declarations, or as they were
made in his Fed. R. Crim. P. 11(c)(1)(C) plea—the undisputed facts from other
sources provide enough support for the Ponzi scheme determination.” (footnote
omitted)). So without deciding whether Rust’s statements would be admissible,
we conclude that the Howells’ argument fails because the district court’s
decision did not depend on the challenged statements.
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B. Witness Reports
The Howells make several challenges to the three witness reports or
declarations in this case: (1) the expert report of Jonathan O. Hafen, the
receiver in this case; (2) the expert report of D. Ray Strong, an accountant and
fraud examiner; and (3) the report and declaration of Jeffrey T. Shaw, another
accountant and fraud examiner. 8 We first address the challenges that are
common to witnesses, then we address remaining arguments specific to each
witness.
Personal Knowledge. The Howells argue that because Hafen, Shaw, and
Strong lack any involvement in Rust Rare Coin (through personal involvement
in any of the transactions or as employees), they lack personal knowledge about
the scheme and their testimony is therefore inadmissible. But as the district
court correctly noted, a declarant can obtain personal knowledge by reviewing
underlying documents used to prepare a report or declaration. Hafen v. Howell,
No. 2:19-CV-00813-TC-DAO, 2022 WL 1643839, at *2 (D. Utah May 24,
2022); see Bryant v. Farmers Ins. Exch.,
432 F.3d 1114, 1123 (10th Cir. 2005)
(holding that a declarant had personal knowledge of the contents of audit
8
The district court addressed the challenges to Hafen and Strong’s
reports in its summary-judgment memorandum opinion, see Hafen, 2023 WL
2188566, at *2–5, and the challenges to Shaw’s report and declaration in an
earlier memorandum opinion, Hafen v. Howell, No. 2:19-CV-00813-TC-DAO,
2022 WL 1643839 (D. Utah May 24, 2022).
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reports because she reviewed them to prepare her declaration). So the portions
of each report and declaration that analyze documents or summarize reports are
indeed based on each witness’s personal knowledge. See Bryant, 432 F.3d at
1123.
Ultimate Issue. The Howells also argue that Hafen and Strong’s expert
reports are inadmissible because they offer an opinion on the ultimate issue—
whether the Silver Pool was a Ponzi scheme. But the district court granted the
Howells the relief they seek, refusing to rely on either opinion to the extent that
it “reach[es] the legal conclusion of whether the circumstances of the RRC
scheme amount to an illegal Ponzi scheme.” Hafen, 2023 WL 2188566, at *3,
*5. So the court did not abuse its discretion.
Testimony Unhelpful to the Jury. Finally, the Howells argue that Hafen
and Strong’s reports would not help a jury, because neither witness analyzed
the Howells’ specific transactions with Rust Rare Coin. Those arguments come
too late. Because they did not make those arguments before the district court,
and because they raise them for the first time on appeal in their reply brief, the
arguments are not properly before us. ORP Surgical, LLC v. Howmedica
Osteonics Corp., 92 F.4th 896, 923 (10th Cir. 2024); WildEarth Guardians v.
U.S. Env’t Prot. Agency,
770 F.3d 919, 933 (10th Cir. 2014) (holding that
generally a party waives an argument raised for the first time in a reply brief).
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1. Hafen’s Expert Report
The Howells challenge Hafen’s report on two other grounds: (1) that he
is not an expert on Ponzi schemes, and (2) that he relied on hearsay statements.
We will address each argument in turn.
Ponzi Scheme Expert. Federal Rule of Evidence 702(a) permits a witness
“who is qualified as an expert by knowledge, skill, experience, training, or
education” to testify to an opinion if the witness’s “scientific, technical, or
other specialized knowledge will help the trier of fact to understand the
evidence or to determine a fact in issue.” The district court concluded that
Hafen was qualified to testify as an expert on Ponzi schemes because of his
“specialized knowledge of the mechanics of Ponzi schemes” drawn “from his
lengthy representation” of Ponzi-scheme victims. Hafen, 2023 WL 2188566, at
*2. And the district court concluded that those opinions would help a lay jury
understand the mechanics of a sophisticated Ponzi scheme.
Id. at *3.
Before us, the Howells provide a single conclusory sentence saying that
Hafen is not qualified to testify as an expert in Ponzi schemes. They present no
other argument demonstrating that the district court abused its discretion, and
we will not come up with one for them. So we affirm the district court’s
decision to treat Hafen as an expert in Ponzi schemes.
Reliance on Hearsay. The Howells’ final challenge to Hafen’s report is
that it relies on hearsay, including documents and interviews Hafen knows
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about “only third-hand.” At summary judgment, a party may present evidence
in a form that is inadmissible at trial so long as it can be reduced to an
admissible form at trial. Argo v. Blue Cross & Blue Shield of Kan., Inc., 452
F.3d 1193, 1199 (10th Cir. 2006). At trial, an expert may testify to an opinion
based on inadmissible evidence, such as hearsay, so long as experts in their
field would reasonably rely on that kind of data. See Fed. R. Evid. 703; see also
Black v. M & W Gear Co.,
269 F.3d 1220, 1229 (10th Cir. 2001).
Relying on this legal background, the district court considered Hafen’s
report at summary judgment because the substance of his report “may be
presented at trial in an admissible form through Mr. Hafen’s testimony.” Hafen,
2023 WL 2188566, at *3. On appeal, the Howells simply repeat their argument
that the report contains hearsay and fail to argue how the district court’s
reliance on the report was an abuse of discretion. That argument does not
persuade us that the district court abused its discretion.
2. Strong’s Expert Report
The Howells also challenge Strong’s expert report on the ground that his
testimony relies on incomplete and unreliable data in violation of Federal Rule
of Evidence 702(b). Federal Rule of Evidence 702(b) requires that expert
testimony be based on “sufficient facts or data.” The district court found that
although Strong did not rely on a completely comprehensive record, he and his
team analyzed extensive records including bank records, emails, and third-party
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documents. See id. at *4. Before us, the Howells simply repeat their bare
conclusion, not explaining how the district court abused its discretion. Here
too, we affirm the reliance on Strong’s expert report.
3. Shaw’s Declaration
Finally, the Howells challenge Shaw’s declaration on two other grounds:
that he was not disclosed as an expert and that his report contains inaccuracies.
First, as the district court made clear, Shaw was offered as a fact witness, not
as an expert. Hafen, 2022 WL 1643839, at *1. So Hafen had no need to disclose
Shaw as an expert. Second, the Howells argue Shaw’s declaration contains
accounting inaccuracies. The district court reasoned that because the
declaration is admissible as a summary or calculation of voluminous records
under Federal Rule of Evidence 1006, any inaccuracies go to the weight of the
evidence.
Id. at *2; Fed. R. Evid. 1006 (“The proponent may use a summary,
chart, or calculation to prove the content of voluminous writings, recordings, or
photographs that cannot be conveniently examined in court.”). Though a
summary should not be admitted under Federal Rule of Evidence 1006 if it
mischaracterizes or inaccurately reflects the underlying documents, it’s within
the district court’s discretion to determine whether there’s enough evidence to
support the summary. State Off. Sys., Inc. v. Olivetti Corp. of Am.,
762 F.2d
843, 846 (10th Cir. 1985). But if a party’s objections relate to the proponent’s
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conclusions, those objections go more to the weight of the evidence than to its
admissibility. Id.
Here too, the Howells never explain how the district court abused its
discretion. Though the Howells offer us conclusions in their opening brief, in
their reply brief they argue Shaw drew the wrong conclusions about how much
Les and Gretchen profited from the scheme. So that objection goes to the
weight of the evidence, not its admissibility. See id. The district court did not
abuse its discretion in relying on Shaw’s declaration.
III. Les was not a creditor of Rust Rare Coin.
The district court found it undisputed that Les received at least $3.2
million in profits. Hafen, 2023 WL 2188566, at *12. The Howells argue that
this amount is too high. They contend that Les was a creditor of Rust Rare Coin
for his principal investment and thus entitled under Utah law to prejudgment
interest at a rate of 10% per year on that initial investment. For support, the
Howells cite the current version of § 15-1-1 of the Utah Code, which allows a
10% per year interest rate for breaches of contracts in which the parties have
agreed that an interest rate applies but have not specified a rate.
Utah Code
Ann. § 15-1-1 (West 2024).
The district court rejected that argument, reasoning that the current
version of § 15-1-1 became effective after Les made his investments and does
not apply retroactively. Hafen, 2023 WL 2188566, at *11 & n.19. The district
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court explained that the version of § 15-1-1 in effect during Les’s investments
states only that “the legal rate of interest for the loan or forbearance of any
money, goods, or chose in action shall be 10% per annum.” Utah Code Ann.
§ 15-1-1 (West 2019). And the court noted that the Howells had failed to argue
how Les’s investments were a loan or forbearance. Hafen,
2023 WL 2188566,
at *11 n.19.
“We review a district court’s decision granting summary judgment de
novo, resolving all factual disputes and drawing all reasonable inferences in
favor of the non-moving party.” Argo, 452 F.3d at 1199 (emphasis omitted).
The Howells offer us the same argument they did to the district court,
ignoring the statutory shortcomings the district court identified. In addition to
those statutory shortcomings, Les has not shown he was damaged or that he has
a judgment against Rust Rare Coin from which prejudgment interest would
accrue. AE, Inc. v. Goodyear Tire & Rubber Co., 576 F.3d 1050, 1055–56 (10th
Cir. 2009). Because the Howells have failed to show Les has a right to interest
on his principal investment, we reach the same conclusion as the district court
and affirm the denial of prejudgment interest for Les.
IV. Prejudgment Interest for Hafen
After the district court entered judgment against Les and Gretchen, Hafen
filed a motion under Federal Rule of Civil Procedure 59(e) to alter or amend
the judgment to include prejudgment interest. Relief under Rule 59(e) “is
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available in limited circumstances, including (1) an intervening change in the
controlling law, (2) when new evidence previously was unavailable, and (3) the
need to correct clear error or prevent manifest injustice.” Hayes Fam. Tr. v.
State Farm Fire & Cas. Co., 845 F.3d 997, 1004 (10th Cir. 2017) (cleaned up).
Relying on the manifest-injustice avenue, Hafen argued that a failure to
award him prejudgment interest would allow the Howells to enjoy the
fraudulent conveyances as an interest-free loan at the expense of the scheme’s
victims. The district court agreed and awarded Hafen a 5% interest rate, relying
on an unpublished decision from this court that affirmed a similar award.
Hafen, 2023 WL 5000944, at *5–6; see Wing v. Gillis,
525 F. App’x 795, 801–
02 (10th Cir. 2013) (holding that a district court did not abuse its discretion in
awarding 5% prejudgment interest to the receiver in a Ponzi-scheme-ancillary
action). The district court entered an amended judgment to reflect the award of
prejudgment interest. Hafen,
2023 WL 5000944, at *7.
We review a ruling on a Rule 59(e) motion for an abuse of discretion.
Nelson v. City of Albuquerque, 921 F.3d 925, 929 (10th Cir. 2019). An award
of prejudgment interest is within the district court’s discretion. See AE, Inc.,
576 F.3d at 1055. Under Utah law, prejudgment interest is appropriate if the
damage is complete, the amount of loss is fixed as of a particular time, and the
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loss is measurable by facts and figures. 9 See id. “[T]he purpose of awarding
prejudgment interest is to compensate a party for the depreciating value of the
amount owed over time . . . .”
Id. at 1056 (internal quotation marks omitted).
On appeal, the Howells argue the district court erred by allowing
prejudgment interest despite Hafen’s delay in requesting it. But they make no
argument explaining why this delay should prevent relief where the district
court relied on the manifest-injustice avenue. See Hayes Fam. Tr., 845 F.3d at
1004. They also dispute the 5% interest rate, arguing that the rate “should have
been limited to the post-judgment interest rate then applicable.” They cite no
authority to support that position.
At bottom, the Howells fail to present a cogent argument that the district
court abused its discretion in granting Hafen’s Rule 59(e) motion and awarding
him prejudgment interest. So we affirm the district court’s award of
prejudgment interest.
V. The Judgment Against Gretchen
We next consider the district court’s entry of judgment against Gretchen.
Because Gretchen lost about $75,000 in the Ponzi scheme, the district court
denied Hafen’s motion for summary judgment to the extent that he sought to
Because this case is before us under our ancillary jurisdiction, state law
9
governs an award of prejudgment interest. See Olcott v. Del. Flood Co., 327
F.3d 1115, 1126 (10th Cir. 2003); Cornelius,
786 F.3d at 1315. And the parties
do not dispute that Utah law applies.
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recover the $22,000 of distributions she received from the scheme because it
was less than her initial investment. Hafen, 2023 WL 2188566, at *12. Hafen
does not challenge that ruling on appeal. But she is still responsible for the
value of Les’s gift to her of joint tenancy in the Kingman property. Recall that
Les used his distributions from the scheme to buy land in Kingman, Arizona,
and build a house. Hafen,
2023 WL 2188566, at *7. He gave Gretchen joint
title in the property.
Id. at *12–13. So the district court held that under Utah
law, Gretchen was a transferee of the voidable profits that Les put in the
Kingman property.
Id. at *13.
Les was the first transferee of the $3.2 million of voidable funds. Utah
Code Ann. § 25-6-304(2)(b) (West 2024). And he invested at least $3 million of
voidable funds into the Kingman property and gifted to Gretchen joint title in
the property, making Gretchen an immediate or mediate transferee who did not
take for value. Id.; § 25-6-304(3). The asset she received from Les was an
interest in the Kingman property, not the funds Les put into the property.
That’s so because Gretchen never had an interest in the $3 million of voidable
funds; he obtained his profits from his own investments and held the profits in
his own banking account. Gretchen had only a joint interest in the property,
whatever its value. Thus, the UVTA requires that the judgment against her
equal the value of her interest in the property at the time it was transferred to
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her. § 25-5-304(2)(b), (3). With that background, we’ll turn to the Howells’
arguments.
The Howells argue the district court erred in several ways. Three of those
arguments can be dispensed with quickly. First, they argue the district court
entered judgment against Gretchen only because she is Les’s spouse, in
violation of Utah law that prevents a creditor from reaching a spouse’s assets to
satisfy a debt of the other spouse. But the district court entered judgment
against Gretchen not because she was Les’s spouse, but because she was a
transferee of a voidable transaction. Hafen, 2023 WL 2188566, at *12; § 25-6-
304(2)(b).
And the last two arguments can be addressed together. The Howells argue
that Gretchen can’t be liable for Les’s voidable transfers to obtain the Kingman
property, because his investments went to contractors who took in good faith
and for value. Both arguments flow from the premise that once the contractors
took the voidable funds in good faith and for value, the fraudulent profits could
no longer be voidable. First, they argue our analysis stops once the contractors
take the funds; in other words, we shouldn’t look to see if a party was
transferred any value from the contractors’ work. Second, they offer us an
alternative argument: even if we consider any value transferred from the
contractors’ work—i.e., the increase in the property’s value that Gretchen
enjoyed from that work—Gretchen is a transferee of the contractors, not Les. In
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their view, because the contractors are good-faith transferees who took for
value, Gretchen can enjoy the fruits of their labor without any liability. We
doubt that the UVTA supports such a broad reading, but because the record
before us is so sparse on how and when Gretchen took an interest in the
Kingman property, we decline to wade into such a fact-bound discussion and
leave that for the district court on remand.
So here is where we stand in the analysis: Gretchen’s interest in the
Kingman property is voidable because she is an immediate or mediate
transferee of Les who did not take for value. We next turn to the judgment. The
district court entered judgment against Les and Gretchen, stating that:
Judgment is in the amount of $3,218,103.96. This judgment includes
the funds that Leslie M. Howell received from the Receivership
Defendants in excess of his principal investment and transferred to
Gretchen A. Howell by titling their Kingman, Arizona property in
her name as well as his own, which Gretchen A. Howell must
disgorge.
App. vol. 6, at 1518. After judgment was entered, the Howells sought
clarification of the judgment under Federal Rule of Civil Procedure 59(e). They
wanted to know if the judgment against Gretchen was for her interest in the
property (which, they argued Gretchen could satisfy by transferring her interest
back to Les) or was instead a money judgment. If it was a money judgment,
they sought reconsideration of Gretchen’s portion of the judgment, arguing that
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there was insufficient evidence to support a $3,218,103.96 judgment against
Gretchen.
The district court denied the Howells’ motion but clarified that the
judgment against Gretchen was a money judgment based on her joint interest in
the Kingman property. See Hafen, 2023 WL 5000944, at *3, *5. The court
clarified that Gretchen was not jointly liable for the $3,218,103.96 judgment;
instead, she was liable for $1.5 million, half of Les’s investment in the
Kingman property.
Id. at *4–5. The district court got to that number by relying
on Les’s testimony that he invested about $3–4 million in the property, taking
the low-end of that range, and dividing it in half.
Id. Consistent with that
analysis, the court entered an amended judgment stating:
Judgment is in the amount of $3,218,103.96; Gretchen Howell is
liable for $1.5 million dollars of this total amount, and Leslie Howell
is liable for the balance of this $3,218,103.96. In addition to this
amount, Plaintiff Mr. Hafen is awarded $683,847.09 in prejudgment
interest; Gretchen Howell is liable for a proportion of this amount
of prejudgment interest that reflects her liability for $1.5 million
dollars out of the total $3,218,103.96 judgment.
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App. vol. 6, at 1575. The Howells argue the district court erred by awarding a
$1.5 million judgment against Gretchen without sufficient evidence to support
it. 10
We review a district court’s ruling on a Rule 59(e) motion for an abuse of
discretion. Nelson, 921 F.3d at 929. A district court abuses its discretion when
the court relies on an erroneous conclusion of law or a clearly erroneous factual
finding. Hamric v. Wilderness Expeditions, Inc.,
6 F.4th 1108, 1119 (10th Cir.
2021). A finding of fact is clearly erroneous “if it is without factual support in
the record or if, after reviewing all of the evidence, we are left with the definite
and firm conviction that a mistake has been made.”
Id. (internal quotation
marks omitted).
We agree that the district court lacked sufficient evidence to support a
$1.5 million judgment against Gretchen. That said, we see fewer errors in how
the district court got to that dollar figure than the Howells do. Their first
argument is the district court improperly relied on Les’s deposition testimony
that he spent $3–4 million on the property. In their view, that testimony is
inadmissible because Les was speculating and lacked sufficient personal
In their reply brief, the Howells argue that the district court erred by
10
imposing a money judgment, citing a law-review article for the proposition that
fraudulent transfer has historically been an in rem right of a creditor. But on the
next page, the Howells concede the UVTA provides for a money judgment, so
we treat that argument as abandoned.
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knowledge to answer the question. When Les was deposed, he initially refused
to give an estimate of how much money he spent on the property, but in
response to a follow-up question of whether he spent “between three and four”
million dollars, Les responded, “That would probably be a good estimate, yes.”
App. vol. 5, at 1172. Les’s counsel did not object to the exchange.
We see no abuse of discretion in relying on that testimony. Les had
personal knowledge to answer the question because he was the one who spent
the money, so he was not speculating. Though he qualified his answer that it
would “probably be a good estimate,” that equivocation goes to the weight of
the testimony. Id. So we find the district court properly relied on the testimony.
But we find the district court abused its discretion by relying solely on
that testimony to conclude that Gretchen is liable for $1.5 million. The district
court assumed that a $3 million investment in the property led to $3 million in
value for the Kingman property, without any other evidence of the property’s
value on the date of transfer to Gretchen. We have rejected drawing such an
inference. See Georgelas v. Desert Hill Ventures, Inc., 45 F.4th 1193, 1201
(10th Cir. 2022) (reversing a judgment that included the cost of improvements
to a property because the court had no evidence of the property’s value on the
date of transfer).
The UVTA provides that a creditor “may recover judgment for the value
of the asset transferred,” which must “be for an amount equal to the value of
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the asset at the time of the transfer, subject to an adjustment as equities may
require.” § 25-6-304(2)(a), (3) (emphasis added). At oral argument before us,
Hafen argued that the asset that Les transferred to Gretchen was the money
invested in the property, not the value of Gretchen’s interest in the home. In
other words, if Les transferred his interest in the property to Gretchen after he
invested $3 million in the property, Gretchen would be liable for $1.5 million
even if the property by then was worth only $1 million. That argument belies
the language of the statute. The asset Les transferred to Gretchen was an
interest in the Kingman property, so judgment against her must equal the value
of her interest in the Kingman property when it was transferred to her. 11 Id.
We find that Les’s testimony that he probably spent $3–4 million on the
property does not show the value of Gretchen’s interest in the property. The
record before us contains too many unknowns about how that money found its
way to Gretchen and a more developed record will provide greater certainty.
For example, our review of the record reveals that some of Les’s distributions
from Rust Rare Coin were put in an escrow account to which Gretchen was a
beneficiary. App. vol. 4, at 927 (showing a $114,450.85 transfer from Rust
11
Indeed, at oral argument Hafen argued that if Gaylen Rust paid for the
renovations to the property himself, the Howells would be responsible for the
amount spent, not the value of the property. Those are the precise facts of
Georgelas, where we found there was insufficient evidence to hold one spouse
liable for a judgment based only the value of the transfer. Georgelas, 45 F.4th
at 1200–01.
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Rare Coin to an escrow account on which Gretchen was a beneficiary), 930,
1044 (showing a similar $78,000 transfer). For all we know, every penny that
went into the Kingman property came from this or another escrow account. If
so, we’d have no need to assess the value of Gretchen’s interest in the property
because she would have had an interest in the money before it flowed into the
property. As these facts are developed on remand, Gretchen’s liability may rise
or fall, but there must be more evidence to support the amount of the judgment
against her.
Because we find no factual support in the record that the value of the
asset transferred to Gretchen was $1.5 million, we hold the district court erred
in entering judgment against her for $1.5 million. We thus reverse and remand
for further proceedings.
CONCLUSION
For the reasons stated, we affirm in part and reverse in part. The case is
remanded for further proceedings consistent with this opinion.
30
