United States District Court, N.D. Alabama, Southern Division
ROBERT A. BOYD, Plaintiff,
THEODORE MASON and STANLEY SMALL, Defendants.
MEMORANDUM OPINION AND ORDER
VIRGINIA EMERSON HOPKINS United States District Judge
October 22, 2014, Plaintiff Robert A. Boyd (“Mr.
Boyd”) initiated this lawsuit in the Circuit Court of
Jefferson County against Theodore Mason (“Mr.
Mason”), Tom Stanley, and Stanley Small (“Mr.
Small”). (Doc. 1-1). On November 25, 2014, Mr. Mason removed
this action to federal court on the basis of diversity
jurisdiction. (Doc. 1). On January 29, 2015, Mr. Boyd filed
an amended complaint against Mr. Mason, Mr. Small, and Tom
Stanley. (Doc. 14, the “Amended Complaint”). Mr.
Small answered on February 24, 2015, and Mr. Mason answered
on March 3, 2015. (Doc. 20, 21).
26, 2016, Mr. Small filed a Motion for Summary Judgment and
supporting brief. (Doc. 80, 81). Mr. Boyd responded on
September 30, 2016, and Mr. Small replied on October 14,
2016. (Docs. 92, 96).The magistrate judge filed his Report
and Recommendation on March 7, 2017. (Doc. 97). He
recommended that Mr. Small's Motion for Summary Judgment
be granted as to Counts 1, 2, 3, 4, 8, and 9, and as to any
claim of promissory fraud or fraudulent suppression. However,
he also recommended that the Motion for Summary Judgment be
denied as to Counts 5, 6, 7, and 10.
March 21, 2017, Mr. Small filed objections to the magistrate
judge's Report and Recommendation. (Doc. 98). Mr. Boyd
responded in turn on April 10, 2017, and Mr. Small replied on
April 17, 2017. (Docs. 100, 101). Mr. Small's Motion for
Summary Judgment is now ripe for this Court's
De Novo Review of Objections to Magistrate Judge's
the Court engages in its own analysis, it is important to
emphasize that the magistrate judge is not making any
final factual determinations or rulings on summary
judgment, but rather only providing recommendations. Instead,
the Court has reviewed de novo those portions of the
record that relate to the parties' objections and has
separately and independently determined the correctness of
any objected-to findings and recommendations.
accepted process is set forth statutorily in 28 U.S.C. §
636, which states in part that:
(b)(1) Notwithstanding any provision of law
to the contrary-
(A) a judge may designate a magistrate judge
to hear and determine any pretrial matter pending before the
court, except a motion for injunctive relief, for judgment on
the pleadings, for summary judgment, to dismiss or quash an
indictment or information made by the defendant, to suppress
evidence in a criminal case, to dismiss or to permit
maintenance of a class action, to dismiss for failure to
state a claim upon which relief can be granted, and to
involuntarily dismiss an action. A judge of the court may
reconsider any pretrial matter under this subparagraph (A)
where it has been shown that the magistrate judge's order
is clearly erroneous or contrary to law.
(B) a judge may also designate a
magistrate judge to conduct hearings, including evidentiary
hearings, and to submit to a judge of the court proposed
findings of fact and recommendations for the disposition, by
a judge of the court, of any motion excepted in subparagraph
(A), of applications for posttrial relief made by
individuals convicted of criminal offenses and of prisoner
petitions challenging conditions of confinement.
(C) the magistrate judge shall file his
proposed findings and recommendations under subparagraph (B)
with the court and a copy shall forthwith be mailed to all
Within fourteen days after being served with a copy, any
party may serve and file written objections to such proposed
findings and recommendations as provided by rules of
court. A judge of the court shall make a de
novo determination of those portions of the
report or specified proposed findings or recommendations
to which objection is made. A judge of the court may
accept, reject, or modify, in whole or in part, the findings
or recommendations made by the magistrate judge. The judge
may also receive further evidence or recommit the matter to
the magistrate judge with instructions.
28 U.S.C. § 636(b) (footnotes omitted) (emphases by
the de novo review requirement in particular, a
district court's obligation is to independently review
those portions of the record to which objections are made, as
opposed to reviewing the entire record. See, e.g.,
Washington v. Estelle, 648 F.2d 276, 282 (5th Cir.
1981) (“Both in his brief and at oral argument,
Washington maintains that the District Court erred in
reviewing de novo only the objected to
portion of the magistrate's findings, rather than
reviewing the entire record de
novo.”); id. (“Based on the language
of this order, we are convinced that the District Judge
sufficiently complied with the act which requires ‘a
de novo determination of those portions of the
report or specified proposed findings or recommendations to
which objection is made.') (quoting 28 U.S.C. §
it is incumbent upon the parties to timely raise any
objections that they may have regarding a magistrate
judge's findings contained in the report and
recommendation, as the failure to do so subsequently waives
or abandons the issue even if such matter was presented at
the magistrate judge level. See, e.g., United States v.
Pilati, 627 F.3d 1360, 1365 (11th Cir. 2010)
(“While Pilati raised the issue of not being convicted
of a qualifying offense before the magistrate judge, he
did not raise this issue in his appeal to the district court.
Thus, this argument has been waived or abandoned by his
failure to raise it on appeal to the district court.”)
Summary Judgment Standard
Federal Rule of Civil Procedure 56, summary judgment is
proper if there is no genuine dispute as to any material fact
and the moving party is entitled to judgment as a matter of
law. Fed.R.Civ.P. 56(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91
L.Ed.2d 2265 (1986) (“[S]ummary judgment is proper if
the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a
matter of law.”) (internal quotation marks omitted).
party requesting summary judgment always bears the initial
responsibility of informing the court of the basis for its
motion and identifying those portions of the pleadings or
filings that it believes demonstrate the absence of a genuine
issue of material fact. Celotex, 477 U.S. at 323,
106 S.Ct. at 2553. Once the moving party has met its burden,
Rule 56(c) requires the non-moving party to go beyond the
pleadings in answering the movant. Id. at 324, 106
S.Ct. at 2553. By its own affidavits - or by the depositions,
answers to interrogatories, and admissions on file - it must
designate specific facts showing that there is a genuine
issue for trial. Id.
underlying substantive law identifies which facts are
material and which are irrelevant. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91
L.Ed.2d. 202 (1986). All reasonable doubts about the facts
and all justifiable inferences are resolved in favor of the
non-movant. Chapman v. AI Transport, 229 F.3d 1012,
1023 (11th Cir. 2000). Only disputes over facts that might
affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.
Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. A
dispute is genuine “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.” Id. If the evidence presented by the
non-movant to rebut the moving party's evidence is merely
colorable, or is not significantly probative, summary
judgment may still be granted. Id. at 249, 106 S.Ct.
movant may satisfy its initial evidentiary burden depends on
whether that party bears the burden of proof on the given
legal issues at trial. Fitzpatrick v. City of
Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). If the
movant bears the burden of proof on the given issue or issues
at trial, then it can only meet its burden on summary
judgment by presenting affirmative evidence showing
the absence of a genuine issue of material fact - that is,
facts that would entitle it to a directed verdict if not
controverted at trial. Id. (citing United States
v. Four Parcels of Real Property, 941 F.2d
1428, 1438 (11th Cir. 1991)). Once the moving party makes
such an affirmative showing, the burden shifts to the
non-moving party to produce “significant, probative
evidence demonstrating the existence of a triable
issue of fact.” Id. (emphasis added).
issues on which the movant does not bear the burden of proof
at trial, it can satisfy its initial burden on summary
judgment in either of two ways. Id. at 1115-16.
First, the movant may simply show that there is an absence of
evidence to support the non-movant's case on the
particular issue at hand. Id. at 1116. In such an
instance, the non-movant must rebut by either (1) showing
that the record in fact contains supporting evidence
sufficient to withstand a directed verdict motion, or (2)
proffering evidence sufficient to withstand a directed
verdict motion at trial based on the alleged evidentiary
deficiency. Id. at 1116-17. When responding, the
non-movant may no longer rest on mere allegations; instead,
it must set forth evidence of specific facts. Lewis v.
Casey, 518 U.S. 343, 358, 116 S.Ct. 2174, 2183, 135
L.Ed.2d 606 (1996). The second method a movant in this
position may use to discharge its burden is to provide
affirmative evidence demonstrating that the
non-moving party will be unable to prove its case at trial.
Fitzpatrick, 2 F.3d at 1116. When this occurs, the
non-movant must rebut by offering evidence
sufficient to withstand a directed verdict at trial on the
material fact sought to be negated. Id.
neither party has objected to the magistrate judge's
description of the factual background of the case in his
Report and Recommendation, that section is set out in full,
with no alteration:
Plaintiff Robert A. Boyd holds a Bachelor of Science in
Accounting from the University of Alabama, has worked as a
Certified Public Accountant (CPA) for approximately 40 years,
and is licensed to practice in 15 states. (Boyd Depo. at 19,
21). Boyd has been a Certified Fraud Examiner (CFE) certified
by the Association of Certified Fraud Examiners since 2005.
Boyd is a member of an accounting firm and is a partner in
Yeager and Boyd CPAs (Y&B). (Id. at 7).
Plaintiff acknowledges that, during 2012, he carried with him
the knowledge available to a CPA or CFE to identify fraud and
had the ability to exercise professional care and look out
for his own financial welfare the same way he does for his
clients. (Id. at 55-57). He holds himself out as a
consultant in the identification, detection and prevention of
fraud. (Id. at 212). Boyd also has served as an
expert witness, testifying as a CPA in a case involving
accusations of fraud. (Id. at 41-42).
Defendant Stanley Small is a contractor and owner of Air
Comfort Company, a company that specializes in heating and
air conditioning. (Small Depo. at 19-20). Defendant Theodore
Mason is an attorney with the law firm of Greenberg, Traurig,
LLP, and practices in the state of Pennsylvania. (Mason Depo.
at 27, 32). However, Mason also represents “purchasers
of assets by investors who are looking to buy.”
(Id. at 33). According to Small, he and Mason were,
prior to the events that are the basis of this lawsuit,
involved in numerous investment deals together, including
bond, real estate and gold deals. (Small Depo. at 58-59).
Among other things, Small had previously provided $150, 000
that was supposed to be invested in a gold mine through a
person identified as A.D. Singh. However, that money was
apparently never invested in a gold mine and was lost or
stolen. (Id. at 58-63). Small testified that Mason
“brought the deal” for the gold to Small.
(Id. at 63-64). However, Mason claims that it was
Small who introduced him to Singh and “brought the gold
opportunity” to Mason. (Mason Depo. at 64). Small
testified that he later learned that Mason never invested any
of his own money in the deal. (Small Depo. at 61). The money
invested by Small was lost. (Id. at 62).
Small testified that he made attempts to get back the money
he invested in the gold mine. Although the details vary and
sometimes conflict between the testimonies of Small and
Mason, it is undisputed that these attempts to find A.D.
Singh and get back the money invested in the gold scheme led
them to an individual known as Brian Malthus, who represented
himself as working for the CIA. (Small Depo. at 88, 130).
This, in turn, led them to talk to individuals identified as
Foster and Bell, also allegedly with the CIA, who were
supposedly going to help them get the money back. According
to Small, Malthus informed him that the CIA was aware of
Singh and his activities. He advised them that they could
“turn him over” to the IMF and there would
be a finder's fee they could collect. Then, later,
Malthus provided them with “option two.”
(Id. at 138-39). Under this option, Malthus offered
them the opportunity to invest in a CIA “trading
platform.” According to Small, the CIA did not want to
take down Singh just yet because it wanted to watch him to
see if he would lead it to others who were higher up in
whatever organization in which he was involved. Therefore, in
return for agreeing not to pursue Singh at this time, they
were offered the opportunity to invest in the trading
platform. (Id. at 140-44). Small testified that he
and others were told that they would receive eight times
their investment at one point and ten times their investment
at another. (Id. at 144-45). According to Small, he
and Mason were both communicating with Malthus and both
thought they were dealing with a real CIA agent.
(Id. at 146). In fact, at one time on a non-video
Skype call, Small was involved in a conversation with
Malthus, another supposed CIA-agent called Trish Weiss, and
Leon Panetta, whom Small believed was the Director of the
(Id. at 148).
In order to participate in the trading platform, Malthus
informed Small that he would need to raise about $1, 800,
000. (Small Depo. at 145). Upon learning of this investment
opportunity, Small contacted plaintiff Robert Boyd, an
accountant with whom he was acquainted from a prior business
deal, to see if any of his clients would be interested in
participating. (Boyd Depo. at 198-99). Boyd learned of this
at some time between July 1 and July 16, 2012. (Id.
at 109, 114, 118, 123).
Boyd was unable to explain with any specificity just how the
trading platform was designed to work. However, he believed
that it was “very safe” and that the eight-to-one
return was tax-free. (Id. at 185-86). Boyd testified
that Small told him the investment was “a hundred
percent safe” because the deal was “wired in one
level below the President of the United States, namely Leon
Panetta.” He was also convinced it was safe because of
the involvement of a “five-star” lawyer like Ted
Mason. (Id. at 197).
In addition to an eight-to-one return, Boyd testified that he
was told by Small that he would receive his investment back
within two months and profits within three months.
(Id. at 129-30, 135-37). Boyd acknowledges that he
did nothing to investigate the validity of the claims or the
investment before investing his money, despite being a
trained CFE and having the means and ability to do so.
(Id. at 127-28). Likewise, he did not ask for any
background information on the investment or review any
documentation that would verify the reasonableness and safety
of the investment. (Id. at 124-25, 245-46).
Boyd did discuss the trading platform with his brother,
Charles Boyd, who is also a CPA and CFE, to see if he wanted
to participate. Charles Boyd declined because the risk
involved was intolerable to him. (Charles Boyd Depo. at 21,
23-24). Charles Boyd considers lack of documentation and
unsolicited offers to invest in investment schemes to be
“red flags” that an investment is fraudulent.
(Id. at 54).
Instead of providing the names of clients who might be
interested in participating in the trading platform, Boyd
chose to participate himself. (Boyd Depo. at 104-05). On July
16, 2012, Boyd attempted to make his first investment to the
trading platform by wiring $250, 000 through Citizens Bank to
a bank in Nigeria. (Id.). Citizens Bank refused to
wire the funds because such a transfer raised a fraud alert.
(Id. at 94-96). According to Boyd, Small then
directed him to send $125, 000 to Regions Bank in Mobile in
the name of Voncille Smith. Boyd did this on July 19, 2012.
At Mr. Boyd's request, First Partners Bank wired $125,
000 to the Regions account held by Ms. Smith. Ms. Smith then
wired this money to Nigeria based on information she received
from Stanley Small. (Id. at 163-64; V. Smith Depo.
at 28- 29).
Boyd made a second contribution to the investment in the
amount of $250, 000 on July 27, 2012. First Partners wired
$250, 000 to the Regions account held by Ms. Smith. (Boyd
Depo. at 165). Ms. Smith then wired the money to Nigeria on
July 30, 2012.
Small also secured a loan of $100, 000 on July 27, 2012, to
invest in the platform. (Small Depo. at 164-65; Silverstein
Depo. at 33, 36). In accordance with this loan, $100, 000,
less a wire transfer fee of $10, was wired from
Silverstein's Merrill-Lynch account on July 30, 2012, to
Teldrhein Global Inv. LTD account at United Bank for Africa.
(DX 16, Account Statement for Teldrhein Global; DX 17,
Merrill-Lynch wire confirmation of July 30, 2012).
After this first round of investments, Malthus contacted
Small to see if anyone was interested in participating in a
second round of investments. Small relayed this1 information
to Boyd. The return on this investment was said to be
ten-to-one. (Boyd Depo. at 189; Small Decl. at ¶¶
8-9). Boyd was supposed to have his investment returned
within two months and his profits within four months. (Boyd
Depo. at 190, 226-27).
On August 6, 2012, Boyd directed First Partners to wire $62,
500 from a Y&B business account to Ms. Smith's
account at Regions. (Boyd Depo. at 167-68). Although the
money came from a Y&B account, Boyd asserts that the
money was his draw and that he had the authority to do so.
(Id. at 74-81). The Y&B partnership agreement
requires that each partner must agree to a partner's
removal of capital or making a draw. Boyd asserts that none
of his partners has any objection or dispute with these
draws. Charles Boyd testified that the money taken by Robert
Boyd was his (Robert's) draw. Rebecca McCune testified
that, although the partnership agreement required all
partners to agree on a draw, “we aren't that
formal, ” and Thomas Carr had no opinion as to whether
Boyd “did anything wrong” by making these draws.
(Charles Boyd Depo. at 39-40; McCune Depo. at 33; Carr Depo.
On August 7, 2012, Ms. Smith wired the $62, 500 from Boyd to
the United Bank for Africa. (Boyd Depo. at 167-68). On August
13, 2012, Boyd directed First Partners to wire $112, 500 from
a Y&B business account to Ms. Smith's Regions
account. She wired this money, along with money from another
investor, to the United Bank for Africa on August 14, 2012.
(DX 21, Wire Transfer; Smith Depo. at 46-47).
Based on representations made to him, Boyd expected to
receive his first-leg investment back on or about September
19, 2012. (Boyd Depo. at 227-28). When he did not receive his
investment back on time, Boyd started to worry and began
calling Small quite a bit. (Id. at 229). Boyd
testified that he was not yet convinced that he had a problem
because Small kept giving him reasons why the money had not
yet been delivered. One such excuse was that they had talked
to “people at Langley” or “CIA
people” and that the CIA had a committee that met in
October that had to approve the payment. (Id. at
229-30). Boyd testified that, on another occasion, Small told
him that Brian or “one of the guys” was either
sick and in the hospital or had died and that this had
delayed things. (Id. at 231). According to Boyd, as
late as April 2014, Small represented that “the trading
platform was still alive and that it would go.”
(Id. at 238). He testified that this went on all the
way to May of 2014, with Small assuring him that payment was
imminent. (Id. at 232).
Small denies telling Boyd that the investment was “100%
safe, ” but admits that he told Boyd that alleged CIA
Agent Brian Malthus told him it was 100% safe and that he
told Boyd that Malthus had told him this. (Small Depo. at
180-81). However, Boyd testified that he has no information
to indicate that Small did not believe that there was a
trading platform or that he did not really believe that they
would receive a return at eight to ten times the amount they
invested in the platform. (Boyd Depo. at 268-69). Small
stated that he would not have invested money in the platform
if he had not thought that it was a good deal. (Small Depo.
at 188). He admitted that he “put money into it. Lots
of it.” (Id. at 178-88).
In fact, prior to the due date for receiving the return of
his first investment, Small participated in a second leg of
the investment by securing loans from Mr. Silverstein for
$275, 000 on August 6, 2012, and $40, 000 on August 31, 2012.
(Small Depo. at 164-65; Silverstein Depo. at 33, 36). This
money was wired from Mr. Silverstein's account on August
6, 2012, and August 31, 2012, to the Teldrhein Global Inv.
LTD account with the United Bank for Africa. None of the money