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Case 3:07-cv-00032-HWM-HTS Document 26 Filed 06/29/2007 Page 1 of 21

IN THE UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION

ALESCO FINANCIAL, INC. f/k/a
SUNSET FINANCIAL RESOURCES, INC.,
a Maryland corporation,
Movant,
v. CASE NO. 3:07-cv-00032-12HTS

ANTHONY R. PORTER, an individual, DOROTHY M.
PORTER, an individual, FRANK AMELUNG, an
individual, EUGENIA AMELUNG, an individual,
and RICHARD AMELUNG, an individual,
Respondents.
/

ALESCO FINANCIAL INC., a Maryland corporation,

Plaintiff,

v.

FRANK A. AMELUNG and EUGENIA M. AMELUNG,
Trustees under the Amelung Family Revocable Trust
dated December 14, 2005,

Defendant.
/

JUDGMENT CREDITOR ALESCO FINANCIAL INC.’S FIRST MOTION FOR
PROCEEDINGS SUPPLEMENTARY AND FOR INTERPLEADER OF THIRD
PARTIES

COMES NOW Plaintiff ALESCO FINANCIAL, INC. (hereinafter “Alesco”), by

and through its undersigned counsel, pursuant to Fed. R. Civ. P. 69 and Fla. Stat. § 56.29

(2007) and respectfully moves this Court for the conduct of Proceedings Supplementary

and for the entry of an Order impleading Defendants Frank A. Amelung and Eugenia M.

Amelung, Trustees under the Amelung Family Revocable Trust dated December 14,

2005.
Case 3:07-cv-00032-HWM-HTS Document 26 Filed 06/29/2007 Page 2 of 21

As grounds for this Motion, Alesco states as follows:

1. Alesco Financial, Inc. is the judgment creditor named under and is the

current holder of a judgment entered in this cause on March 29, 2007, against the

judgment debtors Frank A. Amelung and Eugenia M. Amelung in the principal amount of

$13,060,614.63 (hereinafter the “Judgment”). Alesco Financial, Inc. is the holder of the

March 29, 2007, judgment.

2. The Judgment referred to in Paragraph 1 above remains unsatisfied and is

not currently the subject of an appeal or of a motion for reconsideration which would stay

the Judgment.

3. On June 19, 2007, Writs of Execution directed to each of the Judgment

Debtors Frank A. Amelung and Eugenia M. Amelung were issued by the Clerk of the

Court.

4. The Writs of Execution are valid and outstanding. See Affidavit in

Support of Judgment Creditor Alesco Financial, Inc.’s first Motion for Proceedings

Supplementary and for Impleader of Third Parties (Exhibit A).

5. Upon information and belief, Defendants Eugenia M. Amelung and Frank

A. Amelung are the acting co-trustees of the Amelung Family Revocable Trust dated

December 14, 2005 (hereinafter referred to as the “Trust”).

6. Pursuant to a Trustee’s Deed dated April 4, 2002 (Exhibit B), which is

recorded at Book 1791, Page 611 of the Official Public Records of Monroe County,

Florida, Eugenia M. Amelung acquired ownership of the following described real

property situate in Monroe County, Florida:

2
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Lot 2, Block 1, Sombrero Beach Village, according to
the Plat thereof recorded in Plat Book 5, Page 86 of the
Public Records of Monroe County, Florida

(hereinafter referred to as the “Property”).

7. On April 10, 2007, the judgment debtors Frank A. Amelung1 and Eugenia

M. Amelung caused to be recorded in the Official Public Records of Monroe County,

Florida, a Warranty Deed nominally dated December 14, 2005 (Exhibit C), whereby the

judgment debtors purported to transfer the Property to Frank A. Amelung and Eugenia

M. Amelung, Trustees under the Amelung Family Revocable Trust dated December 14,

2005.

8. Alesco has retained the undersigned attorneys to represent its interests in

this matter and is obligated to pay its attorneys a reasonable attorneys fee for their

services herein.

COUNT I

(Fraudulent Transfer)

9. Alesco incorporates by reference the allegations of Paragraphs 1 through 8

above to the same extent as if incorporated herein in their entirety.

10. The transfer of the Property to the Trust as referred to in Paragraph 8

above is avoidable as a Fraudulent Transfer pursuant to the provisions of Fla. Stat.

§ 726.105 (2007) (i) as having been made with the actual intent to hinder, delay or

defraud creditors of Frank A. Amelung and Eugenia M. Amelung, including Alesco,

and/or (ii) as having been made without Frank A. Amelung and Eugenia M. Amelung

1
The referenced Warranty Deed identifies Frank A. Amelung as a “Grantor”. It is not
clear how Frank A. Amelung obtained an interest in the Property as Eugenia M. Amelung
is the sole named Grantee under the April 4, 2002, Trustee’s Deed.

3
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having received reasonably equivalent value at a time when Frank A. Amelung and

Eugenia M. Amelung (A) were engaged or were about to engage in a business or a

transaction for which the remaining assets of Frank A. Amelung and Eugenia M.

Amelung were unreasonably small in relation to the business or transaction, or (B)

intended to incur or believed or reasonably should have believed that they would incur,

debts beyond their ability to pay as they became due.

11. Alternatively, the transfer of the Property to the Trust is fraudulent as to

Alesco as having been made after the Judgment was entered and was made without Frank

A. Amelung and Eugenia M. Amelung having received reasonably equivalent value for

the transfer at a time when Frank A. Amelung and Eugenia M. Amelung either were

insolvent or became insolvent as a consequence of such transfer.

12. Proceedings supplementary are necessary for the purpose of affording

Alesco relief to allow Alesco to proceed against the Property held in the Trust in partial

satisfaction of the Judgment debt.

13. Alesco has and will continue to suffer irreparable harm as a consequence

of the judgment debtors Frank A. Amelung and Eugenia M. Amelung fraudulent transfers

of assets such that injunction relief is appropriate in the context of this action.

COUNT II

(Revocable Trust)

14. Alesco realleges and incorporates by reference the allegations of Para-

graphs 1 through 8 above as if realleged and incorporated herein in their entirety.

15. As a matter of law, any assets titled in the name of the Trust are subject to

the claims of the creditors of Frank A. Amelung and Eugenia M. Amelung to the extent

4
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that those assets were transferred to the trust by Frank A. Amelung and/or Eugenia M.

Amelung regardless of whether Frank A. Amelung or Eugenia M. Amelung have the

right, whether independently, jointly or with the consent of a third party, to demand that

the assets in the Trust be returned to them.

16. Proceedings supplementary are necessary and appropriate for purposes of

determining the interest of the Judgment Debtors Frank A. Amelung and Eugenia M.

Amelung in assets held in the Trust and for purposes of causing the Property and any

other assets held in the Trust in which the Judgment Debtors Frank A. Amelung and

Eugenia M. Amelung to be applied in partial satisfaction of the Judgment Debt.

MEMORANDUM OF LAW

A. Proceedings Supplementary Generally

Fed. R. Civ. P. 69(a) directs the application of state procedure for enforcement of

a judgment including, but not limited to, the resort to proceedings supplementary

authorized under state law. That Rule provides in pertinent part as follows:

(a) In General. Process to enforce a judgment for the
payment of money shall be a writ of execution unless the court
directs otherwise. The procedure on execution, in proceedings
supplementary to and in aid of a judgment, and in proceedings on
and in aid of execution shall be in accordance with the practice
and procedure of the state in which the district court is held,
existing at the time the remedy is sought, except that any statute
of the United States governs to the extent that it is applicable. In
aid of the judgment or execution, the judgment creditor or a
successor in interest when that interest appears of record, may
obtain discovery from any person, including the judgment debtor,
in the manner provided in these rules or in the manner provided
by the practice of the state in which the district court is held.

“Under Fed. R. Civ. P. 69, state law concerning supplementary proceedings to enforce a

judgment will govern to the extent that it is not preempted by federal law.” See General

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Trading Inc. v. Yale Materials Handling Corp., 119 F.3d 1485 at n. 22 (11th Cir. 1997),

citing Allied Indus. Int’l, Inc. v. AGFA-GENVAERT, Inc., 688 F. Supp. 1516, 1517

(S.D. Fla. 1988).

B. Florida Practice and Procedure

Fla. Stat. § 56.29 (2007), the Florida proceedings supplementary statute, provides,

in pertinent part, as follows:

56.29. Proceedings Supplementary

(1) When any person or entity holds an unsatisfied
judgment or judgment lien obtained under chapter 55, the
judgment holder or judgment lienholder may file an affidavit so
stating, identifying, if applicable, the issuing court, the case
number and the unsatisfied amount of the judgment or judgment
lien, including accrued costs and interest, and stating that the
execution is valid and outstanding, and thereupon the judgment
holder or judgment lienholder is entitled to those proceedings
supplementary to execution.

(5) The judge may order any property of the judgment
debtor, not exempt from execution, in the hands of any person or
due to the judgment debtor to be applied toward the satisfaction of
the judgment debt.

(9) The court may enter any orders required to carry
out the purpose of this section to subject property or property
rights of any defendant to execution.

(10) Costs for proceedings supplementary shall be
taxed against the defendant as well as all other incidental costs
determined to be reasonable and just by the court including, but
not limited to, docketing the execution, sheriff’s service fees and
court reporter’s fees. Reasonable attorneys fees may be taxed
against the defendant.

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Fla. Stat. § 56.29 (2007)(emphasis added).

“‘Under decisional law interpreting section 56.29, the two jurisdictional

prerequisites for supplementary proceedings are (1) an unsatisfied writ of execution, and

(2) an affidavit averring that the writ is valid and unsatisfied along with a list of persons

to be impleaded. . . . [F]ederal courts may implead for supplemental proceedings in aid

of execution by order to show cause.” General Trading Incorporated, id.; see also Fla.

Stat. § 56.29 (2007). It is not a jurisdictional prerequisite for the initiating of proceedings

supplementary that a writ of execution be returned unsatisfied. See Bleidt v. Lobato, 664

So. 2d 1074 (Fla. 5th DCA 1995).

The proceedings supplementary statute is intended “to empower the court to

follow through with the enforcement of its judgment, so that there would be no necessity

for an independent suit to reach property which legally should be applied to the

satisfaction of the judgment.” Florida Guaranteed Securities v. McAllister, 47 F.2d 762

(S.D. Fla. 1931). “Proceedings supplementary are equitable in nature and should be

liberally construed… They enable speedy and direct proceedings in the same court in

which the judgment was recovered to better afford to a judgment creditor the most

complete relief possible in satisfying the judgment.” Zureikat v. Shaibani, 944 So. 2d

1019, 1023 (Fla. 5th DCA 2006). In conducting proceedings supplementary, “the court

has the authority and in fact a duty to implead third parties.” Allied Industries

International, Inc. v. AGFA-GEVAERT, Inc., 688 F. Supp. 1516, 1518 (S.D. Fla. 1988);

see also Florida Guaranteed Securities, Inc. v. McAllister, 47 F.2d 762 (S.D. Fla. 1931)

(allowing the use of proceedings supplementary to enforce a judgment against real

property which had been fraudulently transferred); Zureikat, 944 So. 2d 1019 (approving

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the use of supplementary proceedings for purposes of impressing an equitable lien on the

judgment debtor’s homestead).

In the context of this case, the impleading of Frank A. Amelung and Eugenia M.

Amelung in their representative capacities as the Trustees of the Amelung Revocable

Family Trust dated December 14, 2005, is warranted for purposes of compelling Frank

A. Amelung and Eugenia M. Amelung, Trustees of the Amelung Revocable Family Trust

dated December 14, 2005 to reconvey the Property to Eugenia M. Amelung, individually,

and/or for purposes of allowing Alesco to cause the interest of Frank A. Amelung and/or

Eugenia M. Amelung in the Trust to be determined and subjected to the reach of the

Alesco’s Judgment.

C. Fraudulent Transfer

A transfer of property to a trust is a “transfer” for purposes of the Florida

Fraudulent Transfer Act (hereinafter the “FFTA”). See generally In re: Crawford, 172

B.R. 365 (Bkrtcy. M.D. Fla. 1994) (amendment of a trust to make the trust irrevocable

held a transfer for purposes of the FFTA). Whether a given transfer is defined as

fraudulent for purposes of FFTA depends upon the circumstances attending that transfer.

Moreover, the nature of the proof required to establish a transfer as fraudulent depends,

in part, on whether the judgment creditor was a “present” creditor or a “future” creditor

of the Judgment debtor. Compare Fla. Stat. § 726.105(2007) (applicable to “present” and

“future” creditors) and § 726.106(2007) (applicable to “present” creditors). For purposes

of this Motion and the FFTA, Alesco respectfully submits that Alesco was a “present”

creditor of the Judgment Debtors Frank A. Amelung and Eugenia M. Amelung at the

time of the “transfer” of the Property to the Trust.

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For purposes of the FFTA, a transfer of real estate is made “when the transfer is

so far perfected that a good faith purchaser of the asset from the debtor against whom

applicable law permits the transfer to be perfected cannot acquire an interest in the asset

that is superior to the interest of the transferee.” Fla. Stat. § 726.107(1)(a). In the context

of this case, the transfer of the Property was made on April 10, 2007, when the Warranty

Deed nominally executed as of December 14, 2005, was recorded in the official public

records of Monroe County, Florida. See Warranty Deed (Exhibit A); see also In re:

Mizrahi, 179 B.R. 322 (Bankr. M.D. Fla. 1995) (noting that under the FFTA, the date of

a transfer of real property is determined by the date of recordation). As such, for

purposes of the FFTA the “transfer” was made twelve days after the Judgment was

issued against the Judgment Debtors. As such, Alesco was a “present” creditor at the

time the transfer of the Marathon, Florida property was made from Frank and Eugenia

Amelung to the Trust. Accordingly, the transfer of the Property to the Trust is avoidable

as to Alesco pursuant to the provisions of either Fla. Stat. §§ 726.105 or 726.106 (2007).

i. Actual Intent to Hinder, Delay or Defraud Creditors (Fla. Stat.
§ 726.105(a))

For purposes of Fla. Stat. § 726.105(1)(a), so-called badges of fraud are referred

to for purposes of establishing the actual intent to defraud by the judgment debtor. See In

re: McCarn’s Allstate Finance, Inc., 326 B.R. 843 (Bankr. M.D. Fla. 2005). For this

purpose, Fla. Stat. § 726.105(2) contains a non-exhaustive list of badges of fraud which

may be relied upon as establishing the requisite intent.

“While a single badge of fraud may only create a suspicious circumstance and

may not constitute the requisite fraud to set aside a conveyance, several of them when

considered together may afford a basis to infer fraud.” General Trading Inc., 119 F.3d at

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1498, citing, Johnson v. Dowell, 592 So. 2d 1194 (Fla. 2d DCA 1992) see also In re:

Mizrahi, 179 B.R. 322, 329 (Bankr. M.D. Fla. 1995). “[C]ourts take into account the

particular facts surrounding the conveyance, and avoid determining in a vacuum the

presence or absence of a debtor’s actual intent to hinder or delay a creditor.” Id., citing

Kirk v. Edinger, 380 So. 2d 1336. “The existence of badges of fraud create a prima facie

case and raises a rebuttable presumption that the transaction is void.” Nationsbank, N.A.

v. Coastal Utilities, 814 So. 2d 1228 (Fla. 4th DCA 2002); In re: PSI Industries, Inc., 306

B.R. 377 (Bkrtcy S.D. Fla. 2003) (“[W]hile a single badge of fraud may create only a

suspicious circumstance, several of them together may afford a basis to infer fraud.”).

Alesco respectfully submits that the facts attendant to the transfer of the Property

to the Trust compel a conclusion that the transfers were fraudulent and were entered into

with actual intent to hinder, delay and defraud the creditors of Frank A. Amelung and

Eugenia M. Amelung for the following reasons, each of which are among the badges of

fraud enumerated in Fla. Stat. § 726.105(2)(a).

· Transfer to an Insider [Fla. Stat. § 726.105(2)(a)]. The transfer was made to a

revocable self-settled trust in which the Judgment Debtors Frank A. Amelung and

Eugenia M. Amelung are the trustees. See December 14, 2005, Warranty Deed

(Exhibit C)2. Accordingly, the transfer was made to an “insider” for purposes of

Chapter 726 of the Florida Statutes and Fla. Stat. § 726.105(2)(a). See In re:

Mizrahi, 179 B.R. at 329 (holding that the transfer to a revocable family trust was

a transfer to an “insider” for purposes of the FFTA); see also, Fla. Stat.

2
Alesco is not presently in possession of a copy of the Trust Agreement.

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§ 726.102(7) (providing a non-exclusive definition of the term “insider” for

purposes of the FFTA).

· Retention of Control [Fla. Stat. § 726.105(2)(b)]. By its very nature a revocable

trust entails the retention of control over the trust assets within the meaning of

Fla. Stat. § 726.105(2)(b) as a revocable trust, by definition, includes the right of

the transferor to revoke the trust and receive the return of the property contributed

to the trust or to otherwise change the beneficial enjoyment of that property. See

generally Black’s Law Dictionary 1321 (6th ed. 1990).

· Non-Disclosure of Transfer [Fla. Stat. 726.105(2)(c)]. The transfer of the

Property was not disclosed to Alesco at the time of the transfer. The Judgment

Debtors were well aware of Alesco’s claim at the time of the transfer as the

Judgment Debtors had, prior to the date of such transfer, (i) arbitration pro-

ceedings initiated against them, (ii) an arbitration award entered against them,

(iii) confirmation proceedings initiated against them for confirmation of the

arbitration award in a proceeding in which they retained counsel and filed an

appearance, and (iv) ultimately had the Judgment entered against them. The

transfer was only discovered by Alesco in connection with Alesco’s investiga-

tions in anticipation of the filing of these supplementary proceedings while

confirming the recording of Alesco’s judgment lien in the Monroe County,

Florida Official Public Records. See generally In re: Crawford, 172 B.R. 365

(Bkrtcy. M.D. Fla. 1994).

· The Relative Timing of the Transfer [Fla. Stat. § 726.105(2)(d) and (j)]. The

transfer of the Property occurred after the Frank A. Amelung and Eugenia M.

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Amelung had been sued on their personal guaranties by Alesco and after a

substantial judgment had been entered against them for purposes of Fla. Stat.

§ 726.105(2)(d) and/or for purposes of Fla. Stat. § 726.105(2)(j). In this regard, it

bears noting yet again that the transfer of the Property to the Trust occurred a

mere twelve days after the Judgment was entered.

· Transfer for No or Nominal Consideration [Fla. Stat. 726.105(2)(h)]. The face of

the deed itself reflects that the conveyance was made for no or nominal

consideration and, therefore, the transfer was not made for reasonably equivalent

value for purposes of Fla. Stat. § 726.105(2)(h). This is borne out by the stated

consideration of “TEN AND 00/100 ($10.00) DOLLARS” as reflected in the

Deed as well as the fact that the Clerk of Court’s notation on the Deed reflects the

payment of documentary stamp tax in the total amount of only seventy cents

($0.70) which is indicative of the transferors having reported no or nominal

consideration as having been paid at the time of the transfer. See Fla. Stat.

§ 201.02(1) (2007) (imposing a tax at a rate of $0.70 on each $100 of

consideration paid for the transfer of real property); see also Fla. Admin. Code

§ 12B-4.012 (2007).

For each of the foregoing reasons, Alesco respectfully submits that the transfer of

the Property to the Trust was made with the actual intent to hinder, delay or defraud the

Judgment Debtor Frank A. Amelung and Eugenia M. Amelung’s creditors within the

meaning of Fla. Stat. § 726.105(1)(a) and, as such, such transfer represents a fraudulent

transfer avoidable in accordance with the provisions of the FFTA.

ii. Transfer for Less than Reasonably Equivalent Value at a Time when
the Judgment Debtor was Engaged or was About to Engage in a

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Business or Transaction for which the Remaining Assets of the
Debtor were Unreasonably Small in Relation to the Business or
Transaction (Fla. Stat. § 726.105(1)(b))

Under Fla. Stat. § 726.105(1)(b) a transfer made for less than reasonably equiva-

lent value may be avoided by a present or future creditor if such transfer was made for

less than reasonably equivalent value at a time when the debtors Frank A. Amelung and

Eugenia M. Amelung were engaged in or about to engage in a business or transactions

for which the remaining assets of the debtors Frank A. Amelung and Eugenia M.

Amelung were unreasonably small in relation to the business or transaction.

While Alesco maintains its position that the subject transfer of the Property to the

Trust took place on April 10, 2007, when the December 14, 2005, Warranty Deed was

recorded in the Monroe County, Florida Official Public Records, Alesco notes that even

if the transfer is deemed to have occurred on December 14, 2005, when the Warranty

Deed was purportedly executed, the transfer of the Property to the Trust at that time,

made for less than adequate consideration, would itself be avoidable pursuant to Fla. Stat.

§ 726.105(1)(b). That transfer took place a mere six months after the personal guarantee

executed by the Judgment Debtors Frank Amelung and Eugenia Amelung in favor of

Alesco; a transaction in which the Judgment Debtors incurred a debt of $16,700,000.00.

Moreover, as affirmatively appears from the Complaint filed by the North Carolina

Attorney General against the Judgment Debtor Frank A. Amelung (Composite Exhibit

D) at that time the Judgment Debtor Frank Amelung was an active participant in a

business venture in which the Judgment Debtor Frank A. Amelung and his co-venturers

defrauded third parties out of tens of millions of dollars in transactions in which the

Judgment Debtor Frank A. Amelung and his co-venturers personally guaranteed those

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debts to third parties. See North Carolina Attorney General Complaint (Composite

Exhibit D).

Alesco respectfully submits that the evidence in the supplementary proceedings

will affirmatively establish that the transfer of the Property to the Trust was made at a

time when the Judgment Debtor Frank A. Amelung’s remaining assets were

unreasonably small in relation to the business and transactions then being conducted by

the Judgment Debtor Frank Amelung.

iii. Transfers for Less than Reasonably Equivalent Value while the
Judgment Debtor was Insolvent (Fla. Stat. § 726.106(1))

Under Fla. Stat. § 726.106(1), a transfer made for less than reasonably equivalent

value may be avoided by a creditor whose claim arose prior to the date of the transfer if

the debtor was insolvent at the time of the transfer. See Fla. Stat. § 726.106(1). “Under

section 726.106, a transfer is fraudulent, without regard to intent, when two elements are

met: (1) there is a transfer without consideration, and (2) the debtor either was insolvent

at the time or was made insolvent as a result of the transaction.” Nationsbank, N.A. v.

Coastal Utilities, 814 So. 2d 1227, 1231 at n. 1 (Fla. 4th DCA 2002). The judgment was

entered on March 29, 2007. See March 29, 2007 Judgment (Docket No. 21). The Deed

was not recorded until April 10, 2007 and, therefore, the transfer of the Property to the

Trust occurred on that date for purposes of the FFTA. See In re: Mizrahi, 179 B.R. 322

(Bankr. M.D. Fla. 1995) (noting that under the FFTA, the date of a transfer of real

property is determined by the date of recordation); see also Sasha & Sasha, Inc. v.

Stardust Marine, 741 So. 2d 558, 559 (Fla. 4th DCA 1999) (Where a deed was not

recorded, “the statute . . . merely postpones the date of the transfer to immediately prior

to the commencement of the action.”).

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Alesco submits, upon information and belief, that the evidence in the proceedings

supplementary will show that the transfer of the Property to the Trust was not made for

reasonably equivalent value. The Monroe County Property Appraiser lists the assessed

value of the Property for ad valorem tax purposes as $799,438.00. See Monroe County

Florida Property Appraiser Property Information Card (Exhibit E). By contrast the face

of the December 14, 2005 Warranty Deed itself reflects that the transfer was made for no

or nominal consideration. These facts affirmatively establish that the Property was trans-

ferred to the Trust for less than reasonably equivalent value.

Finally, Alesco believes, upon information and belief, that the evidence in the

proceedings supplementary will show that Eugenia M. Amelung and Frank A. Amelung

were insolvent at the time of the transfer. As evidenced by the certain pleadings filed in

the State of North Carolina Superior Court, Frank A. Amelung is a party to a receivership

proceeding and may have participated in conduct for which Frank A. Amelung may have

liability for tens of millions of dollars both by virtue of personal guarantees executed by

Frank A. Amelung and/or by virtue of civil or criminal penalties implicated by the

Judgment Debtor Frank A. Amelung’s fraudulent conduct. See Complaint and Order

filed in State of North Carolina v. Peerless Real Estate Services, Inc., North Carolina

Superior Court, Waku County (Composite Exhibit D).

D. Revocable Trust

Regardless of whether the transfer is avoidable as a fraudulent transfer, the

interests of Frank A. Amelung and/or Eugenia M. Amelung in the Trust are also

reachable pursuant to proceedings supplementary brought for the enforcement of the

March 29, 2007, Judgment in accordance with the Florida law on trusts. “A strong public

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policy exists to prevent any person from placing his property in what amounts to a

revocable trust for his own benefit which would be exempt from the claims of his

creditors…. Therefore, if a settlor creates a trust for his own benefit and inserts a spend-

thrift clause, it is void as far as then existing or future creditors are concerned. The

existing or future creditors can reach the beneficiary’s interests under the trust.” In re:

Cattafi, 237 B.R. 853 (Bkrtcy. M.D. Fla. 1999) (applying Florida law); see also Bogert,

Trusts and Trustees, Rev. 2d ed. s 223 (“If a settlor creates a trust for his own benefit and

inserts a spendthrift clause, it is void as far as to then existing or future creditors are

concerned, and they can reach his interest under the trust.”)3.

3
The above principles were recently codified in Fla. Stat. § 736.0505 (2007), a
provision which is part of the new Florida Trust Code which is scheduled to take effect
on July 1, 2007, which provides in pertinent part as follows:

736.0505 Creditors' claims against settlor. --

(1) Whether or not the terms of a trust contain a spendthrift
provision, the following rules apply:

(a) The property of a revocable trust is subject to the claims of
the settlor's creditors during the settlor's lifetime to the extent the
property would not otherwise be exempt by law if owned directly
by the settlor.

(b) With respect to an irrevocable trust, a creditor or assignee of
the settlor may reach the maximum amount that can be distributed
to or for the settlor's benefit. If a trust has more than one settlor,
the amount the creditor or assignee of a particular settlor may
reach may not exceed the settlor's interest in the portion of the
trust attributable to that settlor's contribution.

This provision will be given effect to Trusts existing as of that date and which will
govern all judicial proceedings concerning trusts commenced on or after such date as
well as all judicial proceedings concerning trusts which were commenced prior to such
date unless the court finds that application of the provision in question would
substantially interfere with the conduct of such judicial proceedings or would
substantially prejudice the rights of a party thereto. Fla. Stat. § 736.1303(1)(a) – (c).

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Despite Eugenia M.. Amelung and Frank A. Amelung having conveyed their

respective interests in the Property to the Trust, that transfer will not immunize the

Property from the reach of Alesco’s judgment. For example, in In re: Brown, 303 F. 3d

1261 (11th Cir. 2002), the Court, applying Florida law, held in the context of a self-settled

irrevocable charitable remainder unitrust containing a spendthrift clause that the income

interest of the settlor/debtor subject to the reach of the settlor/debtor’s creditors. In re:

Brown, 303 F.3d at 1271; see also Matter of Witlin, 640 F.2d 661 (5th Cir. 1981), citing

Bogert, Trusts and Trustees, 2d ed. s 223, pp. 438, 439; In re: Cattafi, 237 B.R. 853, 856

(Bkrtcy. M.D. Fla. 1999) (“Public policy prevents Debtor from placing his property in a

revocable trust for his own benefit, thereby shielding the property from the claims of his

creditors. The Trust is void as to Debtor’s existing and future creditors, and such

creditors can reach his interest under the Trust.”); Fehlhaber v. Fehlhaber, 850 F.2d 1453

(11th Cir. 1988) (applying Florida law and permitting the garnishment of a revocable

trust); compare Mason v. Mason, 798 So. 2d 895 (Fla. 5th DCA 2001) (finding a spend-

thrift provision enforceable to prevent a creditor from reaching the discretionary interest

of the debtor/trustee in a trust established for the benefit of the debtor/trustee by a third

party). “[W]hen a person creates a discretionary trust for his own benefit, … ‘his

creditors can reach the maximum amount which the trustee under the terms of the trust

could pay to him or apply for his benefit, even though the trustee in the exercise of his

discretion wishes to pay nothing to the beneficiary or to his creditors, and even though

the beneficiary could not compel the trustee to pay him anything.” Lawrence v. Chapter

7 Trustee, 251 B.R. 630, 642 (S.D. Fla. 2000). This is true regardless of the solvency or

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insolvency of the debtor/settlor at the time the trust was established and the property was

conveyed to the trust. In re: Brown, 303 F.3d at 1267.

Accordingly, the interest in the Property in the possession of Eugenia M.

Amelung and Frank A. Amelung, as Trustees of the Amelung Family Revocable Trust

dated December 14, 2005, is subject to the reach of Alesco’s judgment and, therefore,

Alesco may compel the transfer of the Property back to Eugenia M. Amelung and Frank

A. Amelung and the subsequent levy and execution of Alesco’s judgment on the Property

pursuant to Alesco’s judgment.

E. Injunctive Relief

Fla. Stat. § 726.108(1)(c)1. (2007) authorizes the Court to issue an injunction

preventing the judgment debtor from making further transfers of the asset which is the

subject of the fraudulent transfer action, or of other assets, in accordance with the

applicable principles of equity and the applicable rules of civil procedure. See Fla. Stat.

§ 726.108(1)(c)1. (2007). Alesco Financial Inc. respectfully submits that the circum-

stances are such, given the history of the Judgment Debtors having made fraudulent

transfers of their assets, as to warrant the issuance of permanent injunction to prevent the

judgment debtors Frank A. Amelung and Eugenia Amelung, or either of them, from

making any further transfers or other dispositions of any of their assets for purposes of

placing those assets beyond the reach of their creditors.

WHEREFORE, Alesco respectfully requests the entry of an Order directed to

Defendants Frank A. Amelung and Eugenia M. Amelung, Trustees of the Amelung

Family Revocable Trust dated December 14, 2005 as follows:

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A. Directing the impleader of Frank A. Amelung and Eugenia Amelung in

their respective capacities as trustees of the Amelung Revocable Family Trust dated

December 14, 2005;

B. Directing that Frank A. Amelung and Eugenia M. Amelung, Trustees of

the Amelung Revocable Family Trust dated December 14, 2005, make an appearance and

show cause why the Property and other Trust assets (if any) should not be applied to the

partial satisfaction of the Judgment debt within 20 days after the date of service;

C. Declaring that the judgment lien of Alesco Financial Inc. which was

recorded on April 17, 2007, in the Official Public Records of Monroe County, Florida

attached to the Property as of April 17, 2007;

D. Declaring that the interest of the Amelung Revocable Family Trust dated

December 14, 2005, in the Property (and any other property for which a fraudulent

transfer of property by the Judgment Debtors Frank A. Amelung and Eugenia M.

Amelung was made to the Trust) to levy and execution on Alesco’s March 29, 2007,

Judgment or, alternatively, directing Frank A. Amelung and Eugenia M. Amelung, as

Trustees of Amelung Revocable Family Trust to reconvey title to the Property to Eugenia

M. Amelung and Frank A. Amelung, individually;

E. Entering an injunction against the Judgment Debtors Frank A. Amelung

and Eugenia M. Amelung both individually and in their representative capacities as

Trustees of the Amelung Family Revocable Trust dated December 14, 2005, enjoining

the making of any further transfers or dispositions of any property, or any interest therein,

including the Property; and

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Case 3:07-cv-00032-HWM-HTS Document 26 Filed 06/29/2007 Page 20 of 21

F. Awarding Alesco Financial Inc. its costs and attorneys fees incurred in the

prosecution of this action, jointly and severally against Eugenia M. Amelung,

individually, Frank A. Amelung, individually, and Frank A. Amelung and Eugenia M.

Amelung, Trustees of the Amelung Revocable Family Trust dated December 14, 2005;

and

G. Granting to Alesco Financial Inc. such other and further relief as this

Honorable Court may deem just and equitable.

RESPECTFULLY SUBMITTED this 29th day of June, 2007.

MOSELEY, PRICHARD, PARRISH, KNIGHT & JONES

/s Eric L. Hearn
Eric L. Hearn
Florida Bar No. 0094269
501 W. Bay Street
Jacksonville, Florida 32202
(904) 356-1306; (904) 354-0194 (facsimile)

CERTIFICATE OF SERVICE

I certify that on June 29, 2007, I electronically filed the foregoing Motion for
Proceedings Supplementary and for Interpleader with the Clerk of the Court by using the
CM/ECF filing system, which will send a notice of electronic filing to the following
counsel of record:
John Barber MacDonald
Akerman Senterfitt
50 N. Laura St., Suite 2500
Jacksonville, FL 32202

/s Eric L. Hearn
Eric L. Hearn, Attorney

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INDEX OF EXHIBITS

Exhibit Document Title/Description

A Affidavit in Support of Judgment Creditor Alesco Financial, Inc.’s
first Motion for Proceedings Supplementary and for Impleader of
Third Parties
B April 4, 2002, Trustee’s Deed
C December 14, 2005, Warranty Deed
D Receivership Proceeding Filings
E Monroe County, Florida Property Report Information Printout

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