United States District Court, N.D. Texas, Dallas Division
MARK W. RASMUSSEN, RECEIVER FOR ARISEBANK Plaintiff,
RICHARD SMITH, JR., and KURT F. MATTHEW, JR., Defendants.
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY
BARBARA M. G. LYNN CHIEF JUDGE
the Court is Plaintiff's Motion for Summary Judgment.
(ECF No. 21). The Motion is GRANTED as to
Defendant Kurt F. Matthew, Jr. and DENIED as
moot as to Defendant Richard Smith, Jr.
case, Plaintiff, the Court-appointed receiver, sued
Defendants to recover funds for the Estate of AriseBank and
its affiliates (the “Receivership Estate”)
stemming from AriseBank's cryptocurrency payment toward
the purchase of a nonexistent bank. (ECF No. 1 ¶¶
was a startup venture aiming to provide cryptocurrency and
banking services. (ECF No. 23 at 28-30; see also ECF
No. 22 at 3). AriseBank raised funds primarily by selling its
own cryptocurrency, called “PIVX coins.” (ECF No.
23 at 28-30). In December 2017, AriseBank CEO Jared Rice and
Defendant Smith began discussing AriseBank's potential
purchase of a bank from Defendant Matthew, who allegedly told
Smith he owned a bank. (Id. at 101, 105). Matthew
now states he has never owned a bank. (Id.) On or
about December 13, 2017, Rice and Smith signed a term sheet
outlining the “preliminary terms and conditions”
of the bank purchase (the “Term Sheet”) for a
price of at least $12 million. (Id. at 17-19). Matthew,
the purported owner of the bank for sale, did not sign the
Term Sheet. (Id. at 19). The Term Sheet did not
obligate either Smith or Rice to do anything, and both have
stated that they did not view it as binding. (Id. at
about January 10, 2018, Rice, himself or through one of the
entities in the Receivership Estate, transferred 95, 000 PIVX
coins to Smith as a 10% “due diligence deposit”
on the bank purchase (the “Coin Transfer”).
(See Id. at 21, 72; see also ECF No. 22 at
6-7). AriseBank had an estimated $4.3 million in assets at
the time of the Coin Transfer. (ECF No. 23 at 4-5).
000 PIVX coins were worth an estimated $1.3 million at the
time of the Coin Transfer. (Id. at 4, 63-64,
After converting some of the coins to cash, Smith transferred
$123, 000 to Matthew as a 1% “good faith deposit”
on the purchase. (Id. at 8, 26, 75-80). Defendants
allege in their response to this Motion that this sum was
also for Matthew's “consulting / investing advice,
” and reference the Term Sheet, but the Term Sheet
provides no evidence of this. (See ECF No. 26 at 2;
see also ECF No. 23 at 17-19). Defendants have
stated that they intended the $123, 000 as a 1% deposit on
the purchase price and calculated it as such. (See
Id. at 61-62, 75-76). Matthew has stated he knew the
$123, 000 came from AriseBank and Rice as partial payment for
the purchase of a bank he did not own. (Id. at 107).
alleges that the Coin Transfer was also for the purchase of
his “high frequency trading” software, as
described in the Term Sheet, but Smith did not deliver
software while AriseBank was operating or even before
Plaintiff had informed Defendants of the receivership and
requested the return of the funds from the Coin Transfer.
(Id. at 7, 17, 36, 46-47, 66). Plaintiff states that
he has been unable to locate any software in the Receivership
Estate's assets. (Id. at 7). Rice agreed with
the characterization of the software as “a side
benefit” to “acquiring a bank, ” and when
asked if he cared about the software, he said,
“No.” (Id. at 90). Smith stated that he
advertised a license to use the software for “$10
million a year, ” but that he has not had any paying
customers. (Id. at 67).
receiver, Plaintiff seeks the return to the Receivership
Estate of the Coin Transfer, and moves for summary judgment
on all of his claims: unjust enrichment, conversion, and
fraudulent transfer. (ECF No. 21). Plaintiff also seeks the
award of prejudgment and postjudgment interest, costs and
attorney's fees. (Id. at 2).
Federal Rule of Civil Procedure 56, summary judgment is
proper “if the movant shows that there is no genuine
dispute as to any material fact and that the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A factual issue is material “if its resolution
could affect the outcome of the action.” Weeks
Marine, Inc. v. Fireman's Fund Ins. Co., 340 F.3d
233, 235 (5th Cir. 2003). A factual dispute is “genuine
if the evidence is such that a reasonable [trier of fact]
could return a verdict for the non-moving party.”
Crowe v. Henry, 115 F.3d 294, 296 (5th Cir. 1997).
The Court must resolve all disputed factual controversies in
favor of the non-moving party, “but only if both
parties have introduced evidence showing that an actual
controversy exists.” See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986); see also
Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540
(5th Cir. 2005); Lynch Props., Inc. v. Potomac Ins.
Co., 140 F.3d 622, 625 (5th Cir. 1998) (citation
moves for summary judgment on his claim of constructive fraud
under the Texas Uniform Fraudulent Transfer Act. As this
Court has stated, constructive fraudulent transfer is a
fraudulent transfer without there needing to be intent to
defraud. E. Poultry Distribs., Inc. v. Yarto Puez,
2001 WL 34664163, at *2 (N.D. Tex. Dec. 3, 2001) (Lynn, J.,
presiding), aff'd, Matter of Life Partners
Holdings, Inc., 926 F.3d 103, 120 (5th Cir.
2019). To establish constructive fraud, a plaintiff must
plead facts demonstrating: “(1) a lack of reasonably
equivalent value for the transfer; and (2) the transferor was
financially vulnerable or insolvent at the time of the
transaction.” Id. at 120; see also
Tex. Bus. & Com. Code § 24.005(a)(2).
AriseBank Did Not Receive Reasonably Equivalent Value ...