Dillon

ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT

Re: Dkt. Nos. 148, 155

I. INTRODUCTION

The Internal Revenue Code permits owners of investment property to defer capital gains taxes that would otherwise be due upon the sale of the property through a transaction known as a “1031 exchange.” “In a typical 1031 Exchange, an exchanger [the owner of the investment property] sells'a parcel of real estate and has 45 days to identify a ‘replacement’ property, and 180 days to close on the purchase of the ‘replacement’ property.” Compl, at ¶24. For taxes to be deferred, the exchanger may not take possession of the sale, proceeds but must place the funds in trust with a qualified intermediary (“QI”) to avoid actual or- constructive receipt of the proceeds while a substitute property is purchased. Id, The QI holds legal title to the funds held in trust, but the exchanger retains all rights in the proceeds except for the use and benefit of the money during the exchange period. Id. at ¶ 25.

This action involves a former QI, Vesta Strategies; LLC, which was looted through a Ponzi-like scheme run by its owners, John Terzakis and Robert Estupinian, and for which Terzakis and Estupinian were…