The Court recently issued orders addressing several of the issues common to the various cases currently pending in which Plaintiff seeks to recoup payments made to investors in RaeJean Bonham's Ponzi scheme. See Docket Nos. 444; 447. Defendants have moved for reconsideration and clarification, essentially arguing positions, citing authority and marshaling facts previously presented to and thoroughly considered by this Court. See Docket Nos. 456; 461. In addition, they have now requested that certain issues be certified to the Alaska Supreme Court, pursuant to Alaska Rule of Appellate Procedure 407. See Docket No. 496. Plaintiff has moved for the entry of final judgment as to an individual Defendant, Diana K. Evans; see Docket No. 472, which that Defendant has opposed, see Docket No. 491.

I.     Motions for Reconsideration and Clarification

           The Court has reviewed the motions and concludes that the orders at Docket Nos. 444 and 447 are sufficiently clear and address the issues raised in the motions. The motions for reconsideration and clarification will therefore be denied. Three issues, however, are best put to rest through further explanation. These will be discussed in turn.

      A.     Alaska Fraudulent Conveyance Law: Payments of Money

           Defendants maintain that Plaintiff is attempting to use state law to reach further back into Bonham's scheme than is possible under federal law.

      6 ABR 469  
AS 34.40.010 provides:

           Except as provided in AS 34.40.110, ⁽¹⁾ a conveyance or assignment, in writing or otherwise, of an estate or interest in land, or in goods, or things in action, or of rents or profits issuing from them or a charge upon land, goods, or things in action, or upon the rents or profits from them, made with the intent to hinder, delay, or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands, or a bond or other evidence of debt given, action commenced, decree or judgment suffered, with the like intent, as against the persons so hindered, delayed, or defrauded is void.

           According to Defendants' earlier motion, see Docket No. 59, Plaintiff is attempting to incorporate money into the fraudulent conveyance statute's understanding of goods, utilizing a definition akin to that of "conveyance" in the Uniform Fraudulent Conveyance Act, and/or that of "transfer" in its successor, the Uniform Fraudulent Transfer Act, neither of which have been adopted in Alaska. See id. at 12-13. Defendants cite In re Universal Clearing House Co., 60 B.R. 985 (D. Utah 1986) for the notion that "[s]ince state law both creates and defines property interests, we must look to state law to resolve the question." Universal Clearing House, 60 B.R. at 995 (citing Butner v. United States, 440 U.S. 48, 55 (1979)). While it is true that Alaska has yet to adopt the Uniform Fraudulent Transfer Act (1984), other states have found it applicable to Ponzi schemes under statutes similar to Alaska's statutory scheme, see In re Taubman, 160 B.R. 964 (Bankr. S.D. Ohio 1993), and declaratory of common law, see Rainier Nat'l Bank v. McCracken, 615 P.2d 469 (Wash. Ct. App. 1980).

           So too, the Supreme Court of Alaska has indicated its implicit adoption of elements of the Act as an extension to the common law of Alaska. In First National Bank of Fairbanks v. Enzler, 537 P.2d 517 (Alaska 1975), the court found that the Act was representative of state law with respect to determining existence of a debt owed. See 537 P.2d at 521. Following a discussion on the definition of debt, the court stated in a footnote that "[s]ince the Uniform Fraudulent Conveyance Act, insofar as it is referred to here, codifies the common law and since Alaska is a common law state in this area, it may be assumed the Uniform Act as quoted above correctly states the Alaska law." Id., n.6 (citing Blumenstein v. Phillips, Ins. Ctr., Inc., 490 P.2d 1213, 1218 (Alaska 1971); Neal v. Clark, 251 P.2d 903 (Ariz. 1952)). There would       6 ABR 470   seem no reason to restrict this rationale to the area of determining debt under the Act. As this Court indicated in an earlier order, see Docket No. 444, the Alaska Supreme Court is likely to either ignore restrictive interpretations of AS 34.40.010 based on ancient decisions from other jurisdictions and conclude that it covers fraudulent transfers of money to defraud creditors, or to adopt under its common law power a parallel proceeding to address fraudulent transfers of money.

           In addition, the annotation to AS 34.40.010 references American Jurisprudence 2d's section on fraudulent conveyances, which in turn relies on the Act. See 37 Am. Jur. 2d Fraudulent Conveyances § 1 (1968). Such tacit acceptance is more persuasive than Defendants' notion that the Court should look to that definition of "goods" employed in AS 45.09.105, not at issue in this litigation. For these reasons, the Court is inclined to uphold the Bankruptcy Court's application, see In re Bonham, No. F95-008971-HAR, 1998 WL 823085, at *6 (Bankr. D. Alaska Nov. 11, 1998), finding no clear error. See United States v. Alexander, 106 F.3d 874, 876 (9th Cir. 1991) (district court reviews lower court's determination of applicability under a "clearly erroneous standard").

      B.     Right of Recoupment

           The Court will permit Defendants to present evidence as to whether or not an investment was rolled over unilaterally by the debtor without any action or consent on the part of the Defendant; where such lack of knowledge is found by the trier of fact, Defendants will be afforded an opportunity to assert their right to recoupment. See In re M&L Bus. Machs., 198 B.R. 800, 811-12 (D. Col. 1996). However, this does not equate to the wholesale defense Defendants advocate. See Docket No. 461 at 7. Even as it pertains to "net losers," the recoupment doctrine applies to the case at hand only where Defendants did not actively participate in the investment of their money with Bonham. Recoupment is for the benefit of those individuals who were wrongly swindled of their money; those whose good faith merits a reduction in liability. See, e.g., Reiter v. Cooper, 507 U.S. 258, 265 (1993); Newbery Corp. v. Fireman's Fund Ins. Co., 95 F.3d 1392, 1399-1400 (9th Cir. 1996). Recoupment is not available to those who knew of the high risk of their investment and gambled on that knowledge. Defendants will have to show that Bonham acted unilaterally in rolling over their investment. This, again, is Defendants' burden to prove.

      C.     Right of Recission

           Defendants cite AS 45.55.930 for the proposition that "[e]ach Defendant has the right to rescind each and every contract ever made with Bonham or her corporations." See Docket No. 461 at 2; id., n.2. Parsing this statute in examining Defendants' claims, it is apparent that two provisions preclude Defendants' assertion.

           First, AS 45.55.930(a)(2)'s requirement of an "untrue statement of material fact" or omission thereof necessitates an evaluation of each Defendant's awareness of the venture to which he sought entry. See, e.g., Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1097 (1991) ("But not every mixture with the true will neutralize the deceptive."); Fecht v. Price Co., 70 F.3d 1078, 1082 (9th Cir. 1995) ("[W]hether a statement in a public document is misleading may be determined as a matter of law only when reasonable minds could not disagree as to whether the mix of information in the document is misleading."); In re Pacfic Trencher & Equip., Inc., 735 F.2d 362, 364 (9th Cir. 1984) ("However, whether a filing statement is 'not seriously misleading' does not require that a creditor be actually misled.... It matters that a potential creditor could have been misled."); United States v. Timmins, 464 F.2d 385, 387 (9th Cir. 1972) (person's reliance on misleading information issued by local draft board must be "reasonable in the sense that he was entitled to rely upon the information without making further inquiries"). Because the good faith issue remains for proof at trial, the Court is unable to determine that recission rights arise from misrepresentation in this case.

           Second, AS 45.55.930(g), pursuant to which this Court has precluded Plaintiff from double usury recovery, see Docket No. 445, also applies where a Defendant himself "acquires a purported right under the contract with knowledge of the facts by reason of which its making or performance is in violation, may not base a suit on the contract." See AS 45.55.930(g). Thus, unless a Defendant can prove at trial that he acted in good faith in his dealings with Bonham, that Defendant is precluded from basing rescission on AS 45.55.930. In conclusion, any right a Defendant would have to rescind her contract to avoid Plaintiff's claim would collapse into her good faith defense. There is only one defense, not two.

II.      Motion for Certification

           There may indeed be merit to the certification suggestion, but only after all the evidence is in and a final judgment has been rendered as to each of the investors. At that time,       6 ABR 472   the Alaska Supreme Court will have a complete record and will understand the context in which the questions posed are framed. The supreme court prefers to decide concrete cases, and not render advisory opinions.

III.      Motion for Entry of Final Judgment on Net Gain Only

           Pursuant to this Order, the Court finds that the entry of final judgment would be premature at this time. Each Defendant is indeed entitled to a jury trial as to her participation in the Ponzi scheme.

IT IS THEREFORE ORDERED:

           Defendant's motions at Docket Nos. 456 and 461 are DENIED. The motion for certification at Docket No. 496 is DENIED WITHOUT PREJUDICE to its renewal after final judgment is entered in these consolidated cases. Plaintiff's motion for entry of final judgment at Docket No. 472 is DENIED.

           Dated at Anchorage, Alaska, this 3 l ^st day of May 2000.

JAMES K. SINGLETON, JR.
United States District Judge

N O T E S:

1.       6 ABR 469   AS 34.40.110 is not relevant to this motion.