Irving H. Picard, Trustee for the Liquidation of B v. Charles Ellerin Irrevocable Gift Giving Trust et a

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------X
In re:
BERNARD L. MADOFF INVESTMENT 	SIPA LIQUIDATION
SECURITIES LLC, 	No. 08-01789 (BRL)
Debtor. 	(Substantively Consolidated)
------------------------------------------------------------X
IRVING H. PICARD, as Trustee for the
Liquidation of BERNARD L. MADOFF
INVESTMENT SECURITIES LLC,
Adv. Pro. No. 10-04398 (BRL)
Plaintiff,
v.
CHARLES ELLERIN REVOCABLE TRUST,
In its capacities as GENERAL PARTNER and
LIMITED PARTNER of the ELLERIN
PARTNERSHIP, LTD, et al.,
Defendants.
------------------------------------------------------------X
IRVING H. PICARD, as Trustee for the
Liquidation of BERNARD L. MADOFF
INVESTMENT SECURITIES LLC,
Adv. Pro. No. 10-05219 (BRL)
Plaintiff,
v.
CHARLES ELLERIN IRREVOCABLE GIFT
GIVING TRUST, et al.,
Defendants.
------------------------------------------------------------X
10-05219-brl Doc 17 Filed 03/14/12 Entered 03/14/12 16:35:56 Main Document
Pg 1 of 7

2
APPEARANCES:
BAKER & HOSTETLER LLP
45 Rockefeller Plaza
New York, NY 10111
Telephone: 	(212) 589-4200
Facsimile: 	(212) 589-4201
By: 	David J. Sheehan
Marc E. Hirschfield
Marc D. Powers
Attorneys for Irving H. Picard, Trustee for the Substantively Consolidated SIPA Liquidation of
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
JANET WINTERS
804 Mulberry Lane
Bellaire, Texas 77401
Pro Se
Before: Hon. Burton R. Lifland
United States Bankruptcy Judge
MEMORANDUM DECISION AND ORDER DENYING DEFENDANT JANET
WINTERS’ MOTION FOR SUMMARY JUDGMENT
Before the Court is the motion for summary judgment (the “Motion”) 1 filed by Janet
Winters (“Winters”) pursuant to Federal Rule of Civil Procedure (“Rule”) 56, made applicable
herein by Federal Rule of Bankruptcy Procedure 7056, seeking summary judgment on two
complaints filed by Irving H. Picard, Esq. (the “Trustee”), trustee of the SIPA liquidation of
Bernard L. Madoff Investment Securities LLC (“BLMIS”), for failure to present a genuine issue
of material fact. 	Upon review of the papers and for the reasons set forth below, the Motion is
1 Winters additionally filed a motion to consolidate the two above-captioned adversary proceedings and a motion
seeking adjudication of her summary judgment Motion on the parties’ submissions without oral argument. Both
motions were granted on February 15, 2012. See Memorandum Endorsement Granting Janet Winters' Motion to
Combine Adversary Proceedings 10-4398 and 10-5219 for Limited Purpose and Granting Motion for Submission,
Adv. Pro. No. 10-4398, Dkt. No. 19; Adv. Pro. No. 10-5219, Dkt. No. 16.
10-05219-brl Doc 17 Filed 03/14/12 Entered 03/14/12 16:35:56 Main Document
Pg 2 of 7

3
hereby DENIED.
BACKGROUND
On November 30, 2010, the Trustee filed a complaint (the “Partnership Complaint”)
against, inter alia, Winters and the Ellerin Partnership, Ltd. (the “Ellerin Partnership,” or the
“Partnership”). See Adv. Pro. No. 10-04938, Dkt. No. 1. 	On December 3, 2010, the Trustee
filed a second complaint (the “Trust Complaint,” and together with the Partnership Complaint,
the “Complaints”) against, inter alia, Winters and the Charles Ellerin Irrevocable Gift Giving
Trust (the “Irrevocable Trust,” or the “Trust”). See Adv. Pro. No. 10-05219, Dkt. No. 1.
In the Complaints, the Trustee alleges that the Trust received fictitious profits (the
“Fictitious Profits”) from its own BLMIS account (account number 1E0135), as well as from the
Partnership’s BLMIS account (account number 1E0161).2 Some of those Fictitious Profits were
subsequently transferred (the “Subsequent Transfers”) from the Trust to Winters, a named
beneficiary of the Trust. The Trustee now seeks to avoid and recover these Subsequent Transfers
from Winters.
Winters, proceeding pro se, submits that she is entitled to summary judgment as a matter
of law, as no genuine issue of material fact exists. Specifically, she denies that she ever received
money from BLMIS and argues that there is no evidence to the contrary. 	See Motion for
Summary Judgment, 3 pp. 4–5. The Trustee counters that a genuine dispute as to a material fact
exists because the Trust’s bank records indicate that it received transfers from BLMIS and
subsequently transferred some of those funds to Winters. See Trustee’s Memorandum of Law, 4
2 The Trust is a limited partner in the Ellerin Partnership and, in that capacity, received transfers from the
Partnership.
3 Motion for Summary Judgment and Brief for Janet Winters Individually and as Beneficiary of the Charles Ellerin
Irrevocable Gift Giving Trust [hereinafter “Motion for Summary Judgment”], Adv. Pro. No. 10-04398, Dkt. No. 11.
4 Trustee’s Memorandum of Law in Opposition to Defendant Janet Winters’s Motion for Summary Judgment
[hereinafter “Trust. Opp.”], Adv. Pro. No. 10-04398, Dkt. No. 13.
10-05219-brl Doc 17 Filed 03/14/12 Entered 03/14/12 16:35:56 Main Document
Pg 3 of 7

4
pp. 10–11. 	As such, the Trustee argues that the Motion should be denied. 	The Court concurs
with the Trustee.
STANDARD FOR SUMMARY JUDGMENT
Pursuant to Rule 56, summary judgment is granted “if the movant shows that there is no
genuine dispute as to any material fact.” FED. R. CIV. P. 56(a); FED. R. BANKR. P. 7056. A fact
is “material” if it will affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). 	A dispute over a material fact is genuine “if the evidence is such that a
reasonable [fact-finder] could return a verdict for the nonmoving party.” 	Id. 	As such, “[t]he
non-moving party may defeat the summary judgment motion by producing sufficient specific
facts to establish that there is a genuine issue of material fact for trial.” Lipton v. Nature Co., 71
F.3d 464, 469 (2d Cir. 1995) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986)).
The court’s role in adjudicating a summary judgment motion “is not to resolve disputed
issues of fact but to assess whether there are any factual issues to be tried, while resolving
ambiguities and drawing reasonable inferences against the moving party.” 	Robinson v.
Sanctuary Record Groups, Ltd., No. 03-CIV-10235, 2011 WL 5282680, at *2 (S.D.N.Y. Nov. 2,
2011) (quoting Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986)). 	And when a party
moves for summary judgment “against a plaintiff who has not been afforded the opportunity to
conduct discovery,” the court should grant the motion “only in the rarest of cases.” Trammell v.
Keane, 338 F.3d 155, 161 n.2 (2d Cir. 2003) (quoting Hellstrom v. U.S. Dep’t of Veterans
Affairs, 201 F.3d 94, 97 (2d Cir. 2000)). 	Indeed, summary judgment “is a lethal weapon and
courts must be mindful of its aims and targets, and beware of overkill in its use.” In re Wiltwyck
Sch., 34 B.R. 270, 273 (Bankr. S.D.N.Y. 1983) (quoting Brunswick Corp. v. Vineberg, 370 F.2d
605, 612 (5th Cir. 1967)) (internal quotation marks omitted); see also In re Greenwald, 33 B.R.
10-05219-brl Doc 17 Filed 03/14/12 Entered 03/14/12 16:35:56 Main Document
Pg 4 of 7

5
607, 612 (Bankr. S.D.N.Y. 1983). 	Because Winters proceeds pro se, however, the Court reads
her pleadings “liberally and interpret[s] them to raise the strongest arguments that they suggest.”
In re Enron Corp., 341 B.R. 141, 146 (Bankr. S.D.N.Y. 2006) (quoting McPherson v. Coombe,
174 F.3d 276, 280 (2d Cir. 1999) (internal quotation marks omitted).
DISCUSSION5
I. 	A Genuine Issue of Material Fact Exists Concerning Whether Winters Received
Fictitious Profits Originating From BLMIS
In the instant case, there is a genuine dispute as to a material fact, namely, whether
Winters received fictitious profits from BLMIS. 	Drawing all inferences in favor of the non-
moving party, as the Court must do in a motion for summary judgment, the evidence presented
by the Trustee allows a reasonable fact-finder to conclude that funds received by Winters
originated from BLMIS. 	The Trustee produced records indicating that: (i) Winters was a
beneficiary of the Irrevocable Trust, see Trust. Opp., Ex. D; (ii) the Trust maintained its own
BLMIS account, see Trust. Opp., Ex. C; (iii) the Trust was a limited partner in the Ellerin
Partnership, which also maintained a BLMIS account, see Trust. Opp., Exs. A, B; (iv) the
Irrevocable Trust received transfers from its own BLMIS account and from the Ellerin
Partnership’s BLMIS account, see Partnership Comp., Ex. B; Trust Comp., Ex. B; and (v) the
Irrevocable Trust subsequently transferred some of these funds to Winters—she cashed checks
issued by the Trust for $5,900 on November 1, 2002, $10,000 on June 11, 2003, and $6,000 on
November 10, 2003, among others. See Trust. Opp., Ex. E.
5 As a threshold issue, Winters’ Motion is procedurally deficient because it violates the Case Management Order
(Case No. 08-1789, Dkt. No. 3141) and Local Rule 7056-1. Specifically, Winters failed to (i) obtain leave of the
Court before making a pre-discovery motion for summary judgment, and (ii) seek a pre-motion conference prior to
moving for summary judgment. Furthermore, she failed to include the required 7056-1 statement of material facts.
The Trustee, however, followed procedure and included such statement to which Winters did not respond. See Adv.
Pro. No. 10-4398, Dkt. No. 13, Attachment 1. The above procedural defects notwithstanding, the Motion would
nevertheless be denied because it fails on the merits as well. See Discussion, § I.
10-05219-brl Doc 17 Filed 03/14/12 Entered 03/14/12 16:35:56 Main Document
Pg 5 of 7

6
Winters mistakenly argues that the “Trustee must include evidence proving that the only
funding source for the Ellerin Partnership checking account and the Ellerin Irrevocable Trust
checking account was from a Madoff account.” 	Winters Reply, 6 ¶ 6 (emphasis added).
According to Winters, demonstrating that she received transfers from the Trust that, in turn,
received transfers from BLMIS does not support a finding that she necessarily received BLMIS
funds. 	But Winters’ argument is unavailing: it rests on the untenable assumption that once the
Fictitious Profits were comingled with legitimate funds of the Trust, none of the funds can be
traced to BLMIS. 	Winters overlooks that “the mere commingling of the Defendant’s property
with the proceeds of property fraudulently transferred by the Debtor is not sufficient to defeat
tracing.” Dahar v. Jackson (In re Jackson), 318 B.R. 5, 25 (Bankr. D.N.H. 2004); see IBT Int’l,
Inc. v. Northern (In re Int’l Admin. Servs., Inc.), 408 F.3d 689, 709 (11th Cir. 2005) (quoting
Dery v. United States (In re Bridge), 90 B.R. 839, 848 (E.D. Mich. 1988)) (“It is undeniable that
equity will follow a fund through any number of transmutations, and preserve it for the owner as
long as it can be identified.”); see also United States v. Henshaw, 388 F.3d 738, 741 (10th Cir.
2004) (“[T]he goal of tracing is not to trace anything at all in many cases, but rather [to] serve[]
as an equitable substitute for the impossibility of specific identification.”) (internal quotations
and citations omitted).
Furthermore, at this stage of the proceeding, it is not necessary for the Trustee to specify
what portion of the Subsequent Transfers to Winters was derived from BLMIS. 	The Trustee’s
burden at this juncture “is not so onerous as to require ‘dollar-for-dollar accounting’ of ‘the exact
funds’ at issue.” Silverman v. K.E.R.U. Realty Corp. (In re Allou Distribs., Inc.), 379 B.R. 5, 30
(Bankr. E.D.N.Y. 2007) (“[The debtor’s principal] perpetrated a fraud that can only be described
6 Janet Winters Response to Trustee’s Briefs and Opposition to Motion for Summary Judgment, Adv. Pro. No. 10-
4398, Dkt. No. 15, ¶ 6; Adv. Pro. No. 10-4398, Dkt. No. 14, ¶ 6.
10-05219-brl Doc 17 Filed 03/14/12 Entered 03/14/12 16:35:56 Main Document
Pg 6 of 7

7
as massive. It is not fatal to the Trustee’s case that dollar for dollar, the exact funds cannot be
traced.”) (quoting In re Int’l Admin. Servs., Inc., 408 F.3d at 708). Rather, the Trustee need only
allege sufficient facts to show the relevant pathways through which the funds were transferred
from BLMIS to Winters, which the Trustee has done.7 See id.; see also McHale v. Boulder
Capital LLC (In re 1031 Tax Grp., LLC), 439 B.R. 47, 77–78 (Bankr. S.D.N.Y. 2010) (granting
a trustee summary judgment on a fraudulent conveyance stemming from comingled sources, but
refraining from determining the amount subject to avoidance pending additional information on
the funds in the comingled account). Accordingly, summary judgment is not appropriate.
CONCLUSION
For the reasons set forth above, Winters’ Motion for Summary Judgment is hereby
DENIED.
IT IS SO ORDERED.
Dated: March 14, 2012
New York, New York 	_/s/Burton R. Lifland_____
United States Bankruptcy Judge
7 Courts have broad discretion to determine which monies of comingled funds derive from fraudulent sources. See
Henshaw, 388 F.3d at 741 (“There are several alternative methods, none of which is optimal for all commingling
cases; courts exercise case-specific judgment to select the method best suited to achieve a fair and equitable result
on the facts before them.”); see, e.g., McHale v. Boulder Capital LLC (In re 1031 Tax Gr’p, LLC), 439 B.R. 78, 81
(Bankr. S.D.N.Y. 2010) (concluding that a pro rata allocation of comingled fraudulent transfers was appropriate).
The Court will make such a determination should the Trustee ultimately prevail.
10-05219-brl Doc 17 Filed 03/14/12 Entered 03/14/12 16:35:56 Main Document
Pg 7 of 7