Not a Lexis Advance subscriber? Try it out for free.

CFTC v. Kimberlynn Creek Ranch, Inc.

United States Court of Appeals for the Fourth Circuit

October 29, 2001, Argued ; January 4, 2002, Decided

No. 00-1989

Opinion

 [*189]  WILKINS, Circuit Judge:

Kimberlynn Creek Ranch, Inc., Kingsfield Racing, Inc., Samuel Kingsfield, and Pamela Kingsfield (collectively, "the Relief Defendants") appeal a preliminary injunction entered by the district court freezing their assets and directing them to transfer those assets and related records to a receiver appointed by the court. The Relief Defendants'  [**2]  challenges relate solely to the authority of the district court to enter the preliminary injunction against them. Because we conclude that the district court possessed the authority to enter the preliminary injunction, we affirm.

The Commodity Futures Trading Commission ("the Commission") brought this action against several corporate and individual defendants (collectively, "the Claim Defendants") alleging that they fraudulently telemarketed illegal futures contracts for precious metals and other commodities. The Commission also sued the Relief Defendants and several others, alleging that they held proceeds of the fraud, in which they had no ownership interest, on behalf of the Claim Defendants. The facts regarding the underlying  [*190]  fraud are set forth in the memorandum and order of the district court, see  CFTC v. IBS, Inc., 113 F. Supp. 2d 830, 833-41 (W.D.N.C. 2000), but are not relevant to this appeal. It suffices to say that the district court determined that beginning in 1991, the individual claim defendants created a series of corporations, including a sham headquarters in the Bahamas, for the purpose of telemarketing futures contracts [**3]  in gold and silver bullion and other commodities. Although customers paid storage fees for the commodities, there was no evidence that any physical commodities were ever stored on the customers' behalf.

The district court found that between October 1997 and March 2000, approximately $ 2.41 million traceable to the fraudulent activity was deposited into accounts partially or wholly controlled by the Relief Defendants. About half of this money--$ 1.22 million--was deposited into accounts in the name of Kimberlynn Creek Ranch and Kingsfield Racing, businesses managed by Pamela Kingsfield. An additional $ 790,912 was paid directly to Samuel Kingsfield, and almost $ 400,000 was deposited into Pamela Kingsfield's account. Although Samuel Kingsfield testified that all of the transferred funds constituted payment for services he rendered to one or more of the Claim Defendants, he produced no documentary evidence to support this claim, and the district court discredited his testimony. Evidence further indicated that the corporate claim defendants issued credit cards to Samuel and Pamela Kingsfield and paid for the Kingsfields' charges on those cards. Although the cards were ostensibly for [**4]  business purposes, they were in fact used for tens of thousands of dollars worth of personal expenses.

Read The Full CaseNot a Lexis Advance subscriber? Try it out for free.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.

276 F.3d 187 *; 2002 U.S. App. LEXIS 157 **

COMMODITY FUTURES TRADING COMMISSION, Plaintiff-Appellee, v. KIMBERLYNN CREEK RANCH, INCORPORATED, a California Corporation; KINGSFIELD RACING, INCORPORATED, a Nevada Corporation; SAMUEL KINGSFIELD; PAMELA KINGSFIELD, Defendants-Appellants, and IBS, INCORPORATED, a North Carolina Corporation; IMC TRADING, INCORPORATED, (North Carolina), a North Carolina Corporation; IMC TRADING, INCORPORATED, (Arizona), an Arizona Corporation; IMC TRADING, INCORPORATED, (Nevada), a Nevada Corporation; JOE MILLER COMPANY, d/b/a IMC Trading, Incorporated, a California Corporation; MAZUMA TRADING GROUP, INCORPORATED, d/b/a Pinpoint Marketing, Limited, a Florida Corporation; ALAN STEIN; JOSEPH FINATERI; MICHAEL TEMPLE; INTERNATIONAL BULLION SERVICES, INCORPORATED, (Bahamas), a Bahamas Corporation; F. X. & B., L.L.C., a Nevada Corporation; A.J.S. ENTERPRISES, INCORPORATED, a Nevada Corporation, Defendants.

Prior History:  [**1]  Appeal from the United States District Court for the Western District of North Carolina, at Charlotte. Richard L. Voorhees, District Judge. (CA-00-103-3-V).

Disposition: The defendants, Kimberlynn Creek Ranch, Inc., Kingsfield Racing, Inc., Samuel Kingsfield, and Pamela Kingsfield, appealed a preliminary injunction entered by the district court freezing their assets and directing them to transfer those assets and related records to a receiver appointed by the court. These defendants challenged the authority of the district court to enter the preliminary injunction against them. The court of appeals found that the district court possessed the authority to enter the preliminary injunction, was affirmed.

CORE TERMS

district court, preliminary injunction, funds, nominal defendant, ownership, disgorgement, equitable, subject matter jurisdiction, injunction, freeze, commodities, violations, fraudulent, possessed, nominal

Civil Procedure, Subject Matter Jurisdiction, Jurisdiction Over Actions, General Overview, Jurisdiction, Jurisdictional Sources, Statutory Sources, Preliminary Considerations, Equity, Remedies, Injunctions, Preliminary & Temporary Injunctions, Appeals, Standards of Review, De Novo Review, Business & Corporate Compliance, Governments, Agriculture & Food, Commodity Exchange Act, Securities Law, Commodities Futures Trading, Injunctions, Governments, Secondary Liability, Aiding & Abetting, Judgments, Relief From Judgments, Independent Actions, Postoffering & Secondary Distributions, Federal Jurisdiction, Contracts Law, Personal Property, Rights of Possessors, Criminal Law & Procedure, Preliminary Proceedings, Trials, Bench Trials, Clearly Erroneous Review, Constitutional Law, Fundamental Rights, Procedural Due Process, Scope of Protection