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FDIC v. Lewis

United States District Court, D. Nevada

October 24, 2017

FDIC as Receiver for AMTRUST BANK, f/k/a Ohio Savings Bank, a federal savings bank, et al., Plaintiffs,
v.
REX H. LEWIS, an individual, et al., Defendants.

          ORDER TO SHOW CAUSE AND CERTIFICATION OF FACTS RENEWED MOTION FOR AN ORDER HOLDING JUDGMENT DEBTOR REX LEWIS IN CONTEMPT (ECF NO. 261)

          CAM FERENBACH, UNITED STATES MAGISTRATE JUDGE

         Before the Court is Iota Violet, LLC; Iota Coral, LLC; Iota Cinnamon, LLC; Iota Red, LLC; and Iota Royal, LLC's (“the Iota Entities”) Renewed Motion for an Order Holding Judgment Debtor Rex Lewis in Contempt. (ECF No. 261). Pursuant to 28 U.S.C. § 636(e)(6)(iii), [1] Magistrate Judge Ferenbach certifies the following facts to the Honorable District Judge Mahan:

         I. Case Background

         1. The Court has entered judgment in favor of the Iota Entities and against Rex Lewis and several associated entities for over $59 million. (ECF No. 59). The Iota Entities have sought discovery from Lewis to enable their execution of judgment.

         2. On May 29, 2015, the Court issued an order finding “that Lewis is engaging in contumacious conduct” during this discovery but denying a motion for contempt “with leave to renew and grant[ing] Lewis one last chance to provide full and complete discovery responses.” (ECF No. 146). The Order directed the parties to hold further meet and confers regarding Lewis's discovery duties. (Id.)

         3. The Iota Entities' subsequent discovery has identified different trusts, accounts, and businesses associated with Lewis. For the purpose of this certification of facts, the Court will focus on the trust and bank accounts at issue in the renewed motion to hold Lewis in contempt.

         II. The Holder Trust

         1. On September 25, 2008, Rex Lewis became a settlor of the Lewis APT 2008 Trust (“the Holder Trust”) in his individual capacity and as a co-trustee of the Lewis Trust 1988. (Ex. E1).[2] The Holder Trust is located in St. Vincent and the Grenadines. (Id.)

         2. Lewis, as a co-trustee of the Lewis Trust 1988, was also an original beneficiary of the Holder Trust. (Id. at 32). The Lewis Trust 1988 was removed as a beneficiary on July 12, 2012 with the approval of Lewis as a settlor. (Ex. E5). The Lewis Trust 1988 was reinstated as a beneficiary on December 10, 2013 (Ex. E9) and again removed[3] on August 28, 2014 (Ex. E6).

         3. Lewis testified at the October 16, 2017 hearing (“the hearing”) that he and his attorney, Ron Jenkins, created the Holder Trust because they were concerned about the U.S. Senate altering how offshore trusts could be structured and how the trusts would have to be reported.

         4. The Holder Trust deed contains a provision that the trustee cannot reveal documents regarding the trust to any person or entity except to the settlors and beneficiaries. (Ex. E1 at 27). That provision is subject to another clause-Clause 43-that states to the extent a person has the authority to direct action by the trustee, the trustee is “to accept or recognize only instructions or advice…which are given by or are the result of persons acting of their own free will and not under compulsion of any legal process or like authority.” (Id.)

         5. The Holder Trust defines the “Memorandum of Settlors” as “the document by the same name executed by the Settlors and delivered to the Original Trustees on the date this deed is executed by the Settlors.” (Id. at 4). The Memorandum of Settlors would name an investment advisor and appoint a protector. (Id. at 3, 13, 26). In addition, “the trustees shall distribute income generated on the Trust Assets in accordance with the directions set forth in the Memorandum of Settlors delivered to the Original Trustees by the Settlors at the settlement of this Trust, as it may be modified by the Settlors from time to time.” (Id. at 10).

         6. To date, there has been no evidence of a Memorandum of Settlors dated other than December 2, 2011. In the December 2, 2011 Memorandum of Settlors, Lewis, acting as a settlor, appointed a protector for the Holder Trust. (Ex. E3).

         7. Because there had been no protector originally appointed, the settlors and beneficiaries (Lewis and his wife) changed trustees for the Holder Trust on December 31, 2008.

         8. Lewis testified at the hearing that his consideration for transferring personal assets to the Holder Trust, and thus losing control over them, was asset protection.

         III. Bank Accounts at Issue

         1. The JPMorgan Chase account ending in 6008 was transferred from the Lewis Trust 1988 to the Holder Trust on September 30, 2008. (Ex. B15 at 8; ECF No. 264-13). Lewis was listed as the holder of the account until the account was closed in September 2011. (Ex. H3). Lewis testified at the hearing that he did not know he was listed on the account after the September 2008 assignment until he saw the account documents ...


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