On January 17, 2023, the United States Circuit Court of Appeals for the Second Circuit issued its decision in Jed Horwitt, Receiver v. Flatiron Partners, LP, and Neila Fortino, Case Nos. 21-2245 and 21-2247, (see PDF below), agreeing with the arguments of Z&Z Attorneys Stephen M. Kindseth and James M. Moriarty that the district court had correctly applied the Rising Tide method of distribution to the claims of Flatiron Partners, LP (“Flatiron”) and Neila Fortino (“Ms. Fortino”) which claims arose out of investments in a Ponzi scheme. Z&Z Attorneys successfully argued to both the district court and the Second Circuit that the Receiver’s application of the Rising Tide method of claims distribution, which takes into account all of a claimant’s pre-receivership investments into and distributions from the Ponzi scheme in determining the claimant’s pre-receivership percentage of recovery from the Ponzi scheme, was properly applied to the claims of Flatiron and Ms. Fortino, despite their respective arguments that they were differently situated than other claimants and their claims should therefore be treated differently than those of other claimants.

The Second Circuit decision underscores the equitable nature of receiverships and the need for uniformity in the application of the methodology utilized in distributing assets recovered by the Receiver on behalf of the victims of Ponzi and other fraudulent schemes.

The United States Court of Appeals for the Second Circuit decision is attached.